NEW YORK CITY, N.Y. (CBS) – What do millions of Americans and Starbucks have in common? Both want a break on the rent.
According to The Seattle Times, the coffee giant is pressing landlords to offer rent relief for its stores, citing the coronavirus’ impact on sales.
“Effective June 1, and for at least a period of 12 consecutive months, Starbucks will require concessions to support modified operations and adjustments to lease terms and base rent structures,” Chief Operating Officer Roz Brewer wrote in a May letter to landlords.
Starbucks hasn’t said where around the U.S. it is asking for rent relief. Chief Financial Officer Patrick Grismer said during the company’s most recent earnings call that “we’ve not yet confirmed those arrangements, and it’s really premature to indicate what that relief may look like.”
Like many retailers, Starbucks’s business has been deeply affected by the pandemic. It temporarily closed 2,000 restaurants across China after the outbreak erupted in Wuhan. China and the U.S. account for 61 percent of Starbuck’s presence worldwide, with 15,257 stores in the U.S. and 4,351 in China. Starbucks plans to reopen 90 percent of its U.S. locations in early June.
Starbucks reported $6 billion in revenue during the second quarter, down 5 percent from the previous year, while store sales globally fell 10 percent from the previous year.
Coronavirus has caused “a staggering economic crisis,” and “the psychological and economic scars will last for months, if not years,” Brewer wrote in the letter. Brick-and-mortar retailers won’t reach the same level of sales and income as before the pandemic, so landlords must be willing to “adapt to new realities,” Brewer wrote, according to the Seattle Times.
“This is the worst recession since the Great Depression and far more devastating than the global financial crisis,” Brewer wrote. “What lays ahead is daunting but by no means insurmountable with a shared commitment and a clear path forward.”