Starbucks takes bold action to navigate COVID-19 crisis
Shortly before the Chinese New Year, Belinda Wong made a series of calls with her team. They were wrestling with a decision that would become one of the most momentous in Starbucks history.
As chairwoman and chief executive officer of Starbucks China, she’s lived and breathed the company’s mission to "inspire and nurture the human spirit – one person, one cup and one neighborhood at a time." She took pride in the role of Starbucks stores across the world as a place for human connection. But now, as she considered reports of an alarming new coronavirus outbreak, she knew she had to make a decision quickly whether to close thousands of stores across China to try to quell the spread.
"There was no playbook for this," she said. "It was nothing we'd dealt with – it was a new virus and we had limited facts. There was a lot of uncertainty and the situation was evolving every minute. No one was sure what to do or how things would develop. Yet we had to quickly decide how we were going to lead."
That day, at her home in Shanghai, Wong reminded herself to unwind everything she had learned in her 30 years of experience in the retail world. "We were used to opening stores. And now we were considering doing the opposite. I had to completely reset the way I am used to thinking. But in the end, you have to think about what is the right thing to do to protect the safety of Starbucks partners and customers."
Working with local authorities and landlords, she made the call to close stores.
Over the next few days, thousands of Starbucks stores in China shut their doors, including the iconic Shanghai Reserve Roastery. Starbucks was among the first major brands to proactively close their retail stores, eventually totaling more than half of the company's 4,300 stores that employ 58,000 people.
Starbucks puts people in the center of every decision, she said. "It wasn't so much about business anymore. I remember how Howard (Schultz, Starbucks founder and chairman emeritus) used to say that not every decision is an economic one. That has stuck with me throughout the years. It helped me understand what I needed to do."
Starbucks didn't just close its retail stores. Wong and her team found new ways to support partners, physically, financially and emotionally, and new ways to connect with customers, despite the physical isolation and lockdown imposed in some areas. Today, as new cases in China are on the decline, most of the Starbucks stores in the country are open again. As COVID-19 has spread across more than 70 countries and regions, there are lessons that can be shared around the globe.
Partners at the heart of response
During a crisis, John Culver, Starbucks group president of International Channel Development and Global Coffee & Tea, said "words aren't important, actions are."
As Wong's manager and friend, he was in China in early January for the Starbucks partners annual Chinese New Year celebration and spring dinner in Shanghai. "It truly was a celebration," he said. "It was a celebration of the company, our partners' passion for coffee, and all that's great about Starbucks.… While I was there, news began to emerge that there was this virus."
When the call was made to close stores in China, Wong and Culver talked about what partners would need to feel supported, both emotionally and financially.
Starbucks made the decision to continue paying its partners even when their stores were closed. Even today, as stores reopen, that commitment stands until everyone is back to work.
The company may be impacted financially, Wong acknowledges, but "there are moments where you just have to do things and put the safety of the partners first."
In China, where in normal times a new Starbucks opens about every 15 hours, she knows that partners play a huge role in the company's success. Starbucks has built a culture where every partner is treated like family, she said, which drives strong partner engagement and loyalty.
Culver thinks the business will emerge stronger for it. "What we are seeing in China is the values of the company in action," he said.
Wong wanted to make sure that not only do partners feel cared for, but their families as well. "The whole time I felt as though I wasn't just responsible for 58,000 partners, but for 200,000 or 300,000 individuals, including their families," she said.
In 2017, Starbucks China began offering a pioneering critical illness insurance plan to cover partners' parents. Now, in the wake of the new crisis, the company again expanded insurance benefits for partners and their families.
Frank Han's parents moved in with him after Wuhan was locked down. His father began running a fever and soon afterward, so did his mother, who tested positive for COVID-19. Han, a Starbucks store manager, reached out to his operations leaders at work, and "when they found out about my situation, they activated the whole company, and everyone chipped in to help in any way they could."
Eventually, both of his parents were admitted to the hospital, where they remain in stable condition. The extended insurance "has given me assurance and peace of mind to focus fully on taking care of my parents," he said.
The company also offered a way for partners to check in using its partner app, letting others know that they and their families are safe and well. It also enabled the company to identify partner and family cases immediately, while allowing partners to ask for assistance if needed.
Partners whose stores were closed could also use the app to help fellow partners in stores that were still open. "Above all, they used it to stay connected," said Wong. She began offering daily updates and answering any questions that partners had for her.
"One of the biggest things I learned was how to handle 58,000 people's emotions, to really empathize and care for them, and also uplift their spirits in a difficult time," Wong said. "It changed how I communicate. I bring them along on every step. If they have a question, I answer it personally, no matter who they are."
With many partners staying at home, the company reached out to engage and encourage them to stay positive, to keep the sense of Starbucks community active and hopeful. Partners were invited to attend online classes through Starbucks China University, where they could virtually come together and learn about everything from latte art to personal development, such as leadership training.
Starbucks also began offering the Partner Assistance Program, a free, anonymous counseling service not just for partners, but their family members as well. And, partners supported each other in creative ways as well.
Before the outbreak, Sean Zhu, a shift supervisor at a Starbucks in Wuhan, had planned to host a party in late January to celebrate his birthday with his fellow partners from work. Instead, when the day arrived, he was home alone and under lockdown.
"But the partners did not forget my birthday and they hosted a special 'virtual party' by video call for me," he said. "We are truly a family."
Culver said he and other leaders see that type of support in action time and again. "What do families do during a crisis? They come together and they support and love each other," he said. "They take care of one another. And this is on a scale that we've never seen happen before – and that's uniquely Starbucks."
A cup of comfort to customers
During the height of the outbreak, Wong said she was well aware that coffee isn't just a beverage – it's also a symbol of normalcy and routine.
"We have a sense of responsibility to our customers to serve them that cup of comfort," she said. "At that point we weren't even thinking about the business, I just knew a cup of Starbucks beverage would be good for the soul."
To find ways to allow customers to have that experience while keeping everyone safe, partners got creative.
In the stores that remained open, they created the "Contactless Starbucks Experience." It leverages digital ordering, such as Mobile Order and Pay through the Starbucks app, but minimizes human contact and reduces time in the store itself.
It works like this: A customer orders a beverage via the app, and when they go to the store to pick it up, a partner waiting at the entrance takes their temperature and checks them in. Another partner, wearing gloves, places their beverage on the Mobile Order and Pay station, which has been relocated to the front of the store, then steps aside. The customer then steps forward, picks up their beverage and leaves.
But, despite the lack of human contact, Starbucks partners continue to find ways to connect with customers. In China, when a customer orders via the app, they are given a special code to show when they pick up the order. During the COVID-19 outbreak, the code has been changed to inspiring messages, such as "Hang in there" and "Tomorrow will be spring."
"It is a way to connect with them," Wong said.
Delivery riders bringing coffee to customers sanitize their delivery vehicles and boxes frequently and leave the delivery package in a place where the customer can pick it up without contact. And even then, partners personalize the experience by writing uplifting messages to their customers. "Be strong, like coffee," some of the cups say.
Wong said she marvels that 49 years after the company was founded on bringing people together over coffee, its culture continues to inspire partners and customers to find completely new ways to connect, even with masks, gloves and a restriction on human contact.
Transparency is important so customers understand the precautions being taken, she added. Stores posted signs detailing how the Contactless Starbucks Experience works. "They felt safe and trusted us," she said.
Across China, close to 200 community programs initiated by partners sprang up spontaneously. Many partners delivered handcrafted Starbucks beverages expressing their gratitude to medical personnel in nearby hospitals and others working at the frontline.
"We didn’t ask them to do it, they did it on their own," Wong said. "This is how positive they are and how much love they feel. They are passionate and eager to do their part for the country, and send cheer to all the brave people working tirelessly to serve and protect others."
Lessons for the US and beyond
Last week, a new report by the WHO-China Joint Mission on Coronavirus Disease noted that "China’s bold approach to contain the rapid spread of this new respiratory pathogen has changed the course of a rapidly escalating and deadly epidemic."
But, it went on, "much of the global community is not yet ready, in mindset and materially, to implement the measures that have been employed to contain COVID-19 in China. These are the only measures that are currently proved to interrupt or minimize transmission chains in humans."
In recent weeks, partners at Starbucks headquarters in Seattle have been convening to plan a response for when the virus came to the US and other regions. Rossann Williams, executive vice president of US company-operated business and Canada, said the company has learned a lot from the response in China and Japan and is looking at what is meaningful and appropriate in the United States.
Already, partners in the stores have been directed to sanitize high touch areas at the front and back of the store regularly, ideally every eight minutes, but no more than 30, she said.
Starbucks has also paused on using customers' personal cups in the store and "for here" ware, reusable cups for customers who want to enjoy their beverage in the store, as a way to help prevent the spread of the virus. Customers who have their reusable cups with them will still receive the 10-cent discount.
Williams said the company is currently considering future options for taking care of partners if the situation progresses.
"We'll make whatever courageous decisions we need to make," said Williams. "Our goal – as always – is that after this is over, partners will look back and say, 'I can't believe I work for a company that cares so much for me, my family and my community.'"
Open doors in China
Earlier last week, Wong got stuck in a traffic jam. She couldn't have been happier, she said, after all of the weeks of isolation and people unable to go out, gather and connect.
And, best of all, she said, as the number of new infections began to decline, Starbucks China was able to start reopening doors again. On March 5, the company announced 90 percent of the stores are open again, operating under modified hours and conditions.
Last week, the Shanghai Reserve Roastery reopened after being closed for more than a month.
"The night before it opened, I felt like a kid who was about to go on a picnic with classmates the next day. I went there and I was so happy to see our partners. I wanted to give them a hug but I couldn't since it was contactless," Wong said with a laugh.
Stores in China are still following safety protocols, but the ability to have human connection over a cup of coffee in a Starbucks is back.
At the Roastery that day, Wong saw some of the regular customers. They'd been there for hours, happy to return to a familiar place that they have missed.
"Don't ever take things for granted, things that we see as normal could be taken away tomorrow," said Wong, keenly aware now of how quickly things can change. "You have to tell people you love them right now. Don't even wait."
On the day the Roastery reopened, Wong recorded a video for partners and customers. "During difficult times like this," she said, looking into the camera, "you really see how powerfully the Starbucks spirit comes to life. Our partners, they are all helping each other out and the love and the humanity that they have displayed during this difficult time is something that I will never forget for the rest of my life."
Wong says she hopes that the world will never have to go through anything like this again, but what she has seen and learned has helped underscore her belief in Starbucks partners, customers and the company's mission and values.
"This whole experience is not a lesson of business disruption, but of leadership and humanity," she said. "I’m comforted when I look back and see what we did and know what we mean when we say we are a different kind of company."