Starbucks Seeks Break On Rent From Landlords

(RTTNews) - Starbucks has asked landlords of many of its company-owned stores to give it a break on rent for the next twelve months as the coffee giant's sales have been hurt by the coronavirus pandemic.

The Seattle-based company has sent a letter to its landlords, saying that starting June 1 and for at least the next twelve months, it will need changes to lease terms and base rent structures. The letter was signed by Starbucks Chief Operating Officer Roz Brewer.

Starbucks is one of the largest companies in the U.S. by the number of stores. It has 8,800 company-operated stores in the country.

The request for rent relief by Starbucks comes after the company recently announced plans to reopen most of its coffee shops, as COVID-19 restrictions ease in the U.S. Starbucks had closed most of its company-operated stores in the U.S. and Canada in late March.

On May 4, Starbucks said it plans to reopen 85 percent of its U.S. coffee shops by the end of that week and more than 90 percent of its stores by early June, under modified operations and hours.

The company said it will place new protocols such as mobile ordering, contactless pickup, and cashless payments to enforce social distancing and curb the further spread of the coronavirus.

In late April, Starbucks reported a more than 50 percent fall in net income for the second quarter to $328.4 million or $0.28 per share from $663.2 million or $0.53 per share in the year-ago period. Adjusted earnings of $0.28 per share also missed analysts' expectations.

Revenue for the quarter declined 4.9 percent from last year to $6.00 billion, reflecting lost sales related to the COVID-19 outbreak. Lost sales include the effects of temporary store closures, modified operations, reduced hours, and reduced customer traffic.

Starbucks CFO Pat Grismer had told analysts during the recent earnings call that the company has stayed current on its rent but was in talks with its landlords on "commercially reasonable lease concessions" in the current environment.