Starbucks (NASDAQ:SBUX) plans to announce the full results of its fiscal second quarter after the market close on Tuesday, April 28. There shouldn't be too many surprises as the company has been diligent in communicating with investors at least weekly -- and frequently more often -- about navigating its business through the pandemic and what investors should expect over the coming months.

More broadly, however, I'll be watching Starbucks closely next week as it has been the proverbial canary in a coal mine regarding the impact of the COVID-19 pandemic. With its large base of stores in China, it was at the epicenter of the initial stages of the outbreak, giving investors a sneak peek into what was to come. It provided similar insight into developments in the U.S., staying just ahead of the curve as the pandemic evolved.

A Starbucks barista holding a reusable cup.

Image source: Starbucks.

In a similar sense, what Starbucks has to say about its recovery in the Chinese market and its plans for recovery in both the U.S. and the world will not only provide insight into the company's future but also the path the restaurant industry -- and society -- take forward.

Starbucks provided a look at what was to come

When the company reported its fiscal first-quarter earnings in late January, CEO Kevin Johnson addressed the outbreak in China head-on, saying, "I want to acknowledge the dynamic situation our partners in China are navigating as health officials respond to the coronavirus," and promising to be forthright in communicating details as the situation unfolded. He also noted the company had "closed more than half of our stores in China and continue to monitor and modify the operating hours of all of our stores in the market in response to the outbreak."

By early March, as COVID-19 began its relentless march across the globe, Johnson was as good as his word, releasing a detailed missive regarding the impact of the coronavirus outbreak on Starbucks' business and has continued to keep investors informed with a variety of updates each week.

At its peak, Starbucks had closed about 80% of its stores in China by early February but noted that the vast majority, or about 90%, had since been reopened. The company took similar steps in the U.S. in mid-March, shuttering all sitting areas in its cafes and mobilizing its digital, drive thru, and delivery capabilities. This foreshadowed the wholesale shutdown of in-person dining across the U.S., again giving investors a glimpse of what was to come.

A peek behind the curtain

We already know some of what to expect when Starbucks reports earnings. Earlier this month, the company released a letter detailing its ongoing plans for recovery, updating its quarterly forecast, and pulling its guidance for the remainder of the year. 

Starbucks now expects its profits to be cut in half, with adjusted earnings per share (EPS) of $0.32 and GAAP EPS of $0.28, each down 47% compared to the prior-year quarter. 

However, the company said the worst is yet to come (emphasis mine):

Based on the late-quarter onset of COVID-19 impacts to our business results in the U.S. and other markets globally -- and as the flow-through impact of lost sales in the U.S. is materially greater than the flow-through impact of lost sales in China -- we expect the negative financial impacts to Q3 to be significantly greater than they were in Q2, and to extend into Q4.

Starbucks' flagship Chengdu Taikoo Li store.

Starbucks' flagship Chengdu Taikoo Li store in China. Image source: Starbucks.

There is good news for investors

Management said the company ended the second quarter with about $2.5 billion in cash on its balance sheet. Starbucks further bolstered its financial position, increasing its short-term borrowing capacity to the tune of $3.5 billion, and has temporarily suspended its share buyback program to preserve cash.

The company also said (again, emphasis mine), "We do not expect to reduce our quarterly dividend."

Insight into our future

What Starbucks management has to say next week about its broader plans for reopening stores will help provide context for investors regarding a measured return to the new normal. Starbucks has been at the forefront of the pandemic from the beginning, providing the company with valuable lessons it used to protect its business, its employees, and the public in general.

I'll be looking closely to management's commentary and its vision for the future, as what's happening at Starbucks should again provide a glimpse into what's ahead for the restaurant industry and, more broadly, the economy as a whole.