Dive Brief:

• Starbucks has implemented a COVID-19 Leave of Absence for employees who wish to take unpaid leave through Sept. 30 and accrue up to 20 hours per week toward benefits eligibility, Rossann Williams, EVP and president of Starbucks U.S. and Canada, said in a May 26 letter to partners.
• Partners on leave will keep their existing benefits such as Lyra, Headspace, Spotify, Care@Work, Starbucks College Achievement Plan and food/beverage benefits, but be able to look into any COVID-19 federal and state unemployment compensation, such as $600 per week of unemployment assistance under the CARES Act. Starbucks will continue to pay healthcare premiums in full for staff enrolled in a company plan.
• Starbucks is offering this option as many of its stores are operating with reduced hours and providing fewer hours to staff members due to changing customer routines and occasions, Williams said, adding, “As many of you are already seeing, the need for modified operations and reduced store hours as well as economic impacts and shifted consumer behaviors are unfortunately impacting our partner hours.”

Dive Insight:

Although Starbucks has reopened over 85% of its stores in the U.S., the chain is still seeing the ongoing economic impacts of the novel coronavirus pandemic. The chain already asked its landlords for a year’s worth of rent breaks starting in June, a request that came after Starbucks’ Q2 2020 earnings report revealed a 5% drop in revenue.

Despite this decline, the chain has been providing Service Pay, an additional $3 per hour for employees healthy enough to work, and Catastrophe Pay, which was provided to partners exposed to or who contracted COVID-19 or those facing child care challenges, through May. These benefits were phased out in May following the reopening of stores, but the additional leave will provide new options for employees.

Workers were expected to learn their schedules this week and will have a week to decide if they want to continue working or take the unpaid leave, according to The Wall Street Journal. Employees previously expressed concern that reduced hours would make it difficult for them to continue qualifying for insurance coverage, so this leave of absence will be helpful in allowing employees to continue receiving benefits until Starbucks can provide better hours.

Starbucks also had to close some stores this past weekend just days after reopening due to protests following the death of George Floyd, according to The Wall Street Journal. Some stores sustained damage while others closed to protect employees. 

Since Starbucks already has to return from same-store-sale declines of 3% and a 7% decline in comparable transactions in the Americas and U.S. stores during Q2 2020, it could be another quarter or two until Starbucks could come close to seeing increases in same-store sales.

In the meantime, the coffee chain is already gearing up to build more drive-thrus and pick-up only locations, which could be more appealing to customers reluctant about going inside Starbucks. This move could help the chain regain customer traffic and increase hours available for employees.