Starbucks extends COVID-19 benefits through the end of May, sees 'new phase' for opening stores

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Starbucks (SBUX) says it will now extend its temporary COVID-19 benefits for its U.S. employees, including higher hourly wages for those willing and able to work and catastrophe pay for those who can’t work through the end of May.

Starbucks was among the companies offering its employees catastrophe pay and said it would pay all of its employees, known internally as partners, regardless of whether they work or not through May 3. For those choosing to work, however, the coffee giant recently sweetened the hourly pay with an extra $3 per hour and will continue providing that premium through the end of May.

What’s more, if a partner’s home store is closed, they will have the option to work at a nearby location that’s open. To be sure, employees who are healthy, but unwilling to work after May 3, will no longer receive the catastrophe pay. However, the catastrophe pay will be available through the month of May for anyone who needs to stay home because of a diagnosis or need to self-isolate, or if their store needs to remain closed during that time, or if parents need to homeschool their children.

‘A New Phase’

On March 15, Starbucks suspended café seating and moved to a “to go” format in the U.S. A few days later, Starbucks pivoted to drive-thru and delivery only to adhere to social distancing. Approximately 60% of the 15,000 Starbucks stores in the U.S. offer drive-thru service. The coffee chain offers delivery in partnership with Uber Eats across 49 markets in the U.S.

Starbucks first saw an impact on its business from COVID-19 in China, its second-largest market. In January, the coffee giant had closed more than half of its stores 4,100 in mainland China. Presently, more 95% of the Starbucks stores in China are open, but many with modified hours and limited seating, according to a recent regulatory filing.

EDGEWATER, COLORADO - APRIL 07:  Starbucks employees wear a mask while working the drive-thru window on April 07, 2020 in Edgewater, Colorado. Starting today Starbucks will require all employees to wear facemasks at work. The chain has closed in-store cafes however drive-thru locations remain open. (Photo by Matthew Stockman/Getty Images)
EDGEWATER, COLORADO - APRIL 07: Starbucks employees wear a mask while working the drive-thru window on April 07, 2020 in Edgewater, Colorado. Starting today Starbucks will require all employees to wear facemasks at work. The chain has closed in-store cafes however drive-thru locations remain open. (Photo by Matthew Stockman/Getty Images)

That experience in China has helped inform the decision-making in the U.S. In a letter to employees, CEO Kevin Johnson said they are “beginning to see progress.”

“As we have experienced in China, we are now transitioning to a new phase that can best be described as ‘monitor and adapt.’ This means every community will continue to monitor the COVID-19 situation, and people and businesses in that community will begin to adapt. Gradually, more schools and businesses will open,” Johnson wrote in a letter on Thursday to Starbucks more than 200,000 partners in the U.S.

As such, Starbucks will begin opening stores in modified formats, including continuing drive-thru only, while some stores will use mobile ordering for contactless pickup and delivery, and others will reopen for “to-go” ordering with entryway handoff.