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Apr 17, 2018

Starbucks' training shutdown could cost it just US$16.7M

FILE PHOTO: A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles

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Starbucks Corp., scrambling to restore trust after the arrest of two black patrons at a cafe in Philadelphia, announced Tuesday that it’s going to close more than half its stores in the U.S. next month for an afternoon of bias training.

That could set back the company, which booked US$22.4 billion in revenue last year, a mere US$16.7 million in lost sales, according to Bloomberg calculations.

Starbucks is shutting its so-called company-operated stores temporarily on the afternoon of May 29 -- the day after Memorial Day -- to train nearly 175,000 employees. It booked US$14 billion in sales last year across its 9,412 stores in the Americas. So calculated on a per-store basis, it generated an annual US$12.2 billion from the 8,222 stores closing their doors for the afternoon in the U.S. The average per day: roughly US$35.5 million.

On this basis, a half-day shutdown costs them US$16.7 million. To be sure, Starbucks doesn’t split out U.S. revenue from the Americas, so Bloomberg’s estimates are on an average per-store basis -- and based on figures for fiscal 2017, which ended October 1 last year (the company also owns stores in Canada and Brazil).

The (estimated) cost could well be worth it for the coffee behemoth, as it faces opprobrium in its home -- and biggest -- market after a manager summoned police after two men waited at a Starbucks table without ordering.

Starbucks’ shares haven’t seen much of an effect, but the company has called the arrests a “reprehensible outcome” and vowed to do better. The gesture may also not affect too many customers on the day seeking a blonde espresso or caramel macchiato, though: About 41 per cent of locations aren’t Starbucks-owned and may still remain open.

--With assistance from Leslie Patton