Estimating a loss of $915 million in the second quarter, Starbucks is asking landlords of all of its stores to pardon it for at least a part of rent for the next year, according to a CNBC report.
The coffee chain has been affected by the coronavirus pandemic, which has had people staying at home and unable to enter stores as usual, along with reduced operating hours to slow the spread of the virus. The company also took a financial hit as it issued catastrophe pay for baristas, upped hourly wages and paid for safety-related items like masks, all as revenues were falling.
Starbucks is one of the largest chains in the country by volume of stores, and while the company has been current on rent up to now, according to Chief Financial Officer Pat Grismer, the company anticipates that to change beginning June 1, CNBC reported.
The company told landlords in a letter that it expects to need changes to the lease agreements for at least the next 12 months.
Grismer, speaking with analysts in late April, said the company was engaged in “ongoing conversations” with landlords to find a “commercially reasonable” change to leases that all parties can agree upon, according to CNBC.
The pandemic has created a thorny mess of issues that will all have to be resolved before the economy recovers enough for Starbucks, as well as many of the small- to medium-sized businesses (SMBs) at risk, can bounce back to previous levels of earnings.
A PYMNTS commentary by CEO Karen Webster explains that customers will have to feel safe going out again as many are more afraid of dying from the coronavirus than of not being able to enjoy public life.
And because of that, businesses will have to be assured that customers will come back with a force enough to justify rehiring employees, lest they run out of cash.
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