Dive Brief:

• Starbucks has committed $10 million to establish the Starbucks Global Partner Emergency Relief Program to bring additional support to partners during the novel coronavirus pandemic, according to a press release.
• Funds will be deployed for retail partners in licensed stores through its Emergency Assistance Foundation, to partners in company-operated markets through its Caring Unites Partners Fund, and to partners in Europe through the Starbucks EMEA Partner Relief Fund. 
• The fund offers one-time direct relief grants for partners facing extreme hardship due to COVID-19.

Dive Insight:

Restaurants are facing as much as a 27.1% loss of sales, causing many brands to furlough or permanently lay off much of their staff. For brands with larger retail footprints and a more established presence, the option to provide financial relief to store locations, franchise partners, and employees has become more important than ever. Starbucks reported roughly $26.5 billion in revenue for 2019, making it one of the most profitable restaurant brands in the world. It’s global footprint also allows it to better absorb the impact of COVID-19 by continuing to generate income from communities that have not been as badly hit.

Among the brands that have been able to provide financial assistance, Starbucks’ $10 million commitment is sizeable. The brand is also extending its catastrophe pay program to cover illnesses and family responsibilities tied to COVID-19 and while also providing free coffee to healthcare professionals.

So far, the biggest cash infusion has come from Yum Brands, which is providing operators $70 million in cash advancements to franchisees. Chipotle has offered a similar investment, recently providing $6.5 million in discretionary bonuses for field leaders, apprentices and managers and also recently raised hourly pay by 10% for restaurant employees working between March 16 and April 12.

Other brands have not been able to stay open. The Logan’s Roadhouse parent company laid off 18,000 employees while Union Square Hospitality Group let go 80% of its workforce and The Cheesecake Factory furloughed 41,000 employees. Although large-scale brands are able to absorb the initial shock waves of COVID-19, they have also faced closures. Chipotle closed its European locations and furloughed some of its staff and Starbucks closed over 2,000 locations in China in January, and has since reopened over 90% of these stores by early March, but anticipates a loss of $400 million as comp sales dropped 78% in February. 

The bulk of Starbucks' revenue comes from the U.S, where it operates 18,000 locations. While most U.S. stores remain open with drive-thru and delivery even though dining rooms are closed, Starbucks CEO Kevin Johnson has said that store closures will be a last result.