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Is Starbucks Starting to Make Cuts?

By Jennifer Saibil – Jun 2, 2020 at 8:47AM

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After paying employees for most of the pandemic, the coffee company is getting back to business and facing a new reality.

In a letter to employees last week, Starbucks (SBUX 1.82%) acknowledged that some workers haven't been getting the hours they expected, and noted that they may not get them for a while. Although 85% of U.S. stores have reopened, they're operating under reduced hours, and Starbucks is encouraging workers to take unpaid leave.

The new American shopping landscape

Starbucks initially paid all of its workers through May 3, giving them the option to stay home and handing out bonuses to those who came in. As of May 4, the coffee chain began to reopen closed stores at reduced hours and with many conditions, restricting operations to to-go and drive-thru in most cases. 

Starbucks expects full functionality to return by September, but even that is uncertain under current circumstances.

Starbucks employee wearing a mask.

Image source: Starbucks.

Half in, half out

This puts Starbucks in a challenging situation, as it can't support all of its employees while stores remain only partially open. Executive Vice President and President of U.S. Retail Rossann Williams penned the letter to let workers know about the company's new COVID-19 leave of absence policy, which aims to soften the blow for workers who opt out of work for the time being. The plan allows Starbucks employees to keep their benefits, which include Lyra, Headspace, Spotify, [email protected], the Starbucks College Achievement Plan (SCAP), and store discounts. Starbucks will also continue to pay healthcare premiums for workers enrolled in health plans.

As part of that package, the company is encouraging workers on leave to take advantage of government-sponsored unemployment benefits. It also acknowledged that some workers may choose to leave altogether rather than take reduced hours or unpaid leave.

New store challenges

While the company deals with instituting guidelines and restrictions for optimal customer safety, it also closed several stores over the weekend in the wake of the current protest environment due to damage or to protect workers.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool has a disclosure policy.

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