Starbucks to rev up marketing as US stores gradually reopen

Dive Brief:

Starbucks next week will expand marketing activity to support its delayed spring menu as the coffee chain gradually reopens U.S. stores that had been closed during the COVID-19 pandemic. Starting with 30 locations that offer order pickup instead of seating, Starbucks aims to open 90% of company-owned stores by June, COO Rosalind Brewer said in a quarterly earnings call.
Starbucks will spend within its existing advertising budget for the year, but plans to squeeze those efforts into an accelerated schedule that focuses on mobile ordering and pickup. Its marketing will include TV, digital, paid social and owned media, Brewer said.
Based on its actions in China as the pandemic subsided, Starbucks will use a "monitor and adapt" strategy to reopen U.S. stores while paying attention to safety procedures, President and CEO Kevin Johnson said in the company's earnings announement.

Dive Insight:

Starbucks' plan to boost marketing activity in the U.S. is one of the first signs that the chain is ready to reverse course after closing about half of its company-owned stores due to the coronavirus pandemic. A key part of that strategy will be reaching the 19.4 million active members of its Starbucks Rewards program in the U.S., a considerable audience that receives direct digital communications from the company. Those members generate about 44% of its business, as COO Rosalind Brewer noted in Starbucks' quarterly earnings call, making them a key target group for its marketing activity.

Starbucks also set the stage for a gradual reopening as a pioneer in mobile ordering and payments. Its operations will depend heavily on limiting physical contact at its stores, many of which were known for letting people linger in a relaxed setting with free Wi-Fi. The company instead will rely on a new "entryway handoff" system that lets customers pick up orders without going inside, as Brewer described.

The company has experience with serving customers while practicing social distancing as 58% of its U.S. stores had drive-thru service by the end of March, and 76% of those were open during the pandemic. Starbucks is better positioned than some other restaurant chains to bounce back with its comparably high ratio of drive-thru stores and experience with the effects of COVID-19 in China, where it temporarily closed thousands of stores. Starbucks China has reopened 98% of its stores and the company predicts it will fully recover by Q4.

The resumption of marketing activity in the U.S. will be a key test for Brady Brewer, Starbucks' recently appointed CMO — who isn't related to the company's COO with the same last name. The company in February promoted him from VP of digital customer experience to oversee its marketing plans, data and analytics and food and beverage offering. Brewer's background in guiding the company's push into pick-up and delivery is essential as those services become more central to Starbucks' operations and promotional activities.