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Starbucks Stores in China Are (Mostly) Open for Business

By Daniel B. Kline - Apr 9, 2020 at 9:44AM

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The company is using its experience there to plot its U.S. strategy.

Starbucks (SBUX 1.48%) counts China as its second largest market behind the United States. That means the coffee chain has been hit doubly hard by the coronavirus pandemic -- but it has managed store closures, limited operations, and other hazards well.

The company has kept many of its U.S. stores open for drive-through and delivery. As a digital pioneer, it was well suited to make that switch and it's one of the rare restaurant chains that may still manage to make a profit in the current quarter.

Now, the picture looks a little brighter for Starbucks as its operations have begun to return to normal in China and some other countries.

A barista at the Starbucks Roastery in China.

Starbucks has 95% of its stores in China open. Image source: Starbucks.

Early and decisive

Starbucks has done a good job of taking the needed steps to protect customers and employees. Now, it's bouncing back quickly in the countries that were hardest hit by the coronavirus early on.

"The actions we took in China, beginning in late January, contributed to the steady business recovery we are experiencing, with over 95% of our stores now open, though many are operating with reduced hours and limited seating in compliance with local guidelines," CEO Kevin Johnson wrote in an open letter. "We are encouraged to see similar improvements under way in South Korea, which reinforce both the resilience of our brand as well as our success in replicating our recovery model across markets as people are able to return to their daily lives and work."

Don't call it a comeback

It's a little early to know when some level of normalcy may return to the United States. This letter, though, shows that normal will eventually return.

Daniel B. Kline owns shares of Starbucks. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool has a disclosure policy.

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