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Why Shares of Starbucks are Down Today

By John Rosevear - Updated Mar 12, 2020 at 10:24AM

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How much will retail traffic fall as the coronavirus outbreak grows?

What's happening

Shares of Starbucks (SBUX 3.87%) opened sharply lower on Thursday, as growing concerns about the effects of the novel coronavirus pandemic on businesses and the economy drove a broad-based market sell-off.

As of 11 a.m. EDT, Starbucks shares were down about 7% from Wednesday's closing price.

So what

Like just about every business with a retail presence, Starbucks is exposed to the growing likelihood that customer foot traffic will decline sharply as people stay home to try to slow the spread of COVID-19. 

3 iced drinks in plastic cups with the Starbucks logo.

Image source: Starbucks.

To its credit, Starbucks has moved quickly to try to respond to virus-related concerns:

  • For customers, CEO Kevin Johnson said the company will implement protective measures at its stores on a store-by-store basis as needed. Those could include removing tables to increase distances between patrons, expanding mobile order-and-pay capabilities, and if necessary, converting some stores to drive-through-only stations.
  • For employees, there's a new "catastrophe pay" provision, under which employees diagnosed with COVID-19 will get 14 days to "self-quarantine" at full pay, while those showing symptoms will get three paid days of paid leave after a 24-hour self-quarantine.

Now what

For Starbucks investors, the thing to do now is to watch and wait. The company seems to have done what it can to be ready for a fast-growing pandemic; the question is, how long will it last? 

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