Starbucks announces new operation plans, changes to employee pay

Starbucks outlined new plans to reopen stores amid the dynamic coronavirus pandemic and how those changes will impact catastrophe pay for its employees.

In a letter to employees on Thursday, CEO Kevin Johnson said the company will transition to a new phase of operations in the U.S., "best described as 'monitor and adapt,' based on experience in China during COVID-19."

Johnson said the company's new operations model "will gradually expand and shift the customer experiences we enable in our stores. For example, some Starbucks stores will continue as drive-thru only, others may utilize the mobile ordering experience for contactless pickup and delivery and others may reopen for 'to-go' ordering."

The Seattle-based coffee company said it has tested service options in over 300 U.S. stores over the last few weeks, which included contactless service, entryway pickup, curbside delivery and at-home delivery.

Some Starbucks storefronts remained open "where possible and with safety protocols and limited operations" as an essential business amid shelter-at-home orders, which Johnson hailed in the fight to slow the spread along with other preventative measures.

"This will be a journey and we are thoughtfully preparing for this next phase as we adapt in the U.S.," he said.

Prior to the COVID-19 outbreak Starbucks had drive-thru formats in over 60% of its stores and the company said approximately 80% of all customer orders were placed "on-the-go."

Johnson said they will make operations decisions based on three principles: "Prioritizing the health and well-being of our partners and customers; playing a constructive role in supporting health and government officials as they work to mitigate the spread of this virus; and showing up in a positive and responsible way to serve our communities."

"Our field leaders look at four factors: the local status of the public health crisis, guidance from health and government officials, community sentiment and store operational readiness."

In a corresponding letter, Rossann Williams EVP and president of U.S. company-operated business and Canada, outlined the approach to COVID-19 pay and benefits.

After citing the staggering unemployment numbers in the U.S. which has left over 17 million Americans jobless, Williams said, "there’s no one-size-fits-all solution" for reopening Starbucks stores.

The plan to get Starbucks employees back to work

Beginning May 4, Starbucks will reopen "as many stores as we can with modified operations and best in class safety measures, and intend for any partner who is healthy and well to come back to work."

The coffee chain will extend "service pay" through the end of May, which gives an additional $3 per hour to healthy employees who choose to work. The company will also extend "catastrophe pay" for employees who have been diagnosed or exposed to COVID-19, so they can stay home in quarantine.

"To ensure partners are paid for their average baseline hours, we will make catastrophe pay available to help close the gap between hours worked on service pay and average baseline hours through May 31," Williams said.

Catastrophe pay will also be provided to employees "navigating childcare challenges" until the end of May.