Starbucks CEO says Philadelphia arrests did not hurt sales in April

Starbucks sales in April were not affected by protests and calls of boycotts over the arrests of two black men at Philadelphia cafe, CEO Kevin Johnson said Friday.

A video of the arrest went viral two weeks ago, showing two men being arrested for trespassing after asking to use a Starbucks bathroom.

After the uproar, Starbucks management responded swiftly, meeting city officials and the men who were involved. Johnson was praised for his response, which included flying to meet the two men at a Starbucks in Philadelphia. In addition, the company told CNBC that the manager who called police “is no longer at that store.”

While some speculated that sales might have been hit due to the incident, Johnson told Jim Cramer on CNBC’s “Squawk on the Street” on Friday that wasn’t the case.

“I was on the ground in Philadelphia, understanding every aspect of that and we’re going to do the right thing to be a better company because of that,” Johnson said. “We have not seen a negative impact on our national comps thus far in the month.”

The company plans to shut its company-owed cafes on May 29 for a seminar on racial bias. The event will likely result in millions of dollars in lost sales during the afternoon closure.

While mornings provide Starbucks with the majority of its sales, shuttering even for just a few hours in the afternoon could be costly.

In January, Chairman Howard Schultz said the average Starbucks store makes about $32,000 a week. Using that as a benchmark, 8,000 stores would make about $260 million in that period, or about $36.6 million a day.

If those locations are shut down in the afternoon, the company could easily lose 20 percent, if not more, of its daily sales, or about $7.3 million. Of course, this quick calculation doesn’t take into account that morning sales are probably larger than afternoon sales or any revenue at the company’s licensed stores, which will remain open.

Jeff Sonnenfeld, a senior associate dean for leadership studies at Yale, estimates that Starbucks will lose about $12 million during the May closure.

Be the first to comment

Leave a Reply

Your email address will not be published.