How much is a day’s sales worth? For Starbucks, millions of dollars.
The Seattle-based cafe chain will close all of its US stores today (May 29) in the afternoon for staff training about racial bias. That means shutting down about 8,400 stores for several hours.
The effort follows the widely publicized arrest of two black men in a Philadelphia Starbucks last month. Since the incident, protests and boycotts have been staged targeting the company. Starbucks is worth $3 billion less today than it was on the day of the incident. And now, it will take another financial hit, foregoing sales for an afternoon across the US.
What follows is our best estimate of exactly how much money Starbucks will lose by shutting down its stores.
Starbucks’s top line for the Americas
In its most recent fiscal year, Starbucks reported sales of $15.65 billion in the “Americas.”
Those sales are spread across more than 17,000 stores in 18 countries. Some of those stores Starbucks operates itself, while others operate under a license from the company. Only the stores Starbucks operates in the US are taking part in the training, but some licensees may decide to close, too. We’re going to assume all of the licensed stores stay open, and only look at the effect of closing stores the corporation operates.
In its latest financial report, Starbucks says that it operates 9,496 stores in the Americas, 8,401 of which are in the US. Thus, Starbucks-operated stores account for 49.3% of the 17,000 stores in the Americas. If we assume every store has equal sales 1, that is $7.7 billion generated annually by Starbucks-operated stores in the US alone.
That’s $21.2 million a day, on average. Of course, not every day is average.
Starbucks’ sales on Tuesdays
May 29 is a Tuesday. More specifically, it’s a Tuesday that immediately follows the Memorial Day holiday in the US. Those factors affect people’s coffee buying habits, data provided to Quartz by payment processor Square show. Tuesdays are slightly less popular days to buy coffee, with 13.24% of coffee sales collected on that day in a typical week. (The peak coffee day is Saturday, with 17.1% of weekly sales.)
If we assume that Square’s data collected from the coffee sellers using its platform is representative of Starbucks’ sales, that would mean an average Tuesday at Starbucks-operated stores in the US account for $19.7 million in sales.
But what about the day after Memorial Day? Square’s data showed 5% lower sales on that day versus a typical Tuesday last year. Perhaps, well-rested workers don’t need the caffeine. Or, maybe some coffee drinkers extend their vacations another day and don’t drop in for their morning brew. In either case, this cuts our estimate of forgone sales to $18.7 million.
Square says that the day after Memorial Day was the 284th-highest day for coffee sales in 2017. Not exactly a day when the cash registers are ringing loudly.
Starbucks’ afternoon sales
Starbucks isn’t closing its stores for the entire day, but just for the afternoon. A spokesman for the company said that customers can expect stores to start closing at around 2pm. Square’s data can also help us hone our estimate to focus on just these hours. The data show that most coffee sales happen before 10am, with 23.8% of daily sales coming after 2pm.
Assuming Starbucks follows the same trend, our estimate of lost sales comes to $4.4 million.
For context, that’s 0.02% of the company’s $22.4 billion annual sales last year—barely a drip in the latté.