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2 billion of coffee lost to Covid

Where have the Starbucks crowds gone? In Covid time offices are deserted and so are Starbucks locations in downtown areas. Image credit: WSJ

When Starbucks launched its apps for pre-ordering coffee and decrease queuing in their stores they actually discovered that the queues just shifted, and actually got longer, as too many people pre-order their coffee and then had to queue for the pick up. but that was in a pre-Covid time.

Now the landscape has changed, dramatically. On its July quarterly earning calls Starbuck pointed to a loss of 2 billions in revenues from its stores attributing it to the pandemic. People are no ,onger going to the office and no longer stop on the way to pick up a coffee, nor do they get coffee during a break, because there are no more coffee-breaks.

It is not just Starbucks.  I pointed out in a previous post the crises facing luncheonettes – fast food in general- located in downtown districts whose main business stems from catering office workers, it is the whole white collar ecosystem that is going down the drain.

If you are not going to the office you don’t stop on the way to pick up the newspaper from the guy on the corner, you no longer have your shoes shined as you get out of the metro, you don’t buy a last minute umbrella to cope with the sudden rain, you no longer order from Uber Eats as you get stuck at the office to finish your work. It might seem trivial but the pandemic has killed a market of 100 million white collars just in the US and there are plenty of companies, including many moms and pops, relying of that market.

Additionally, all business related to the presence of white collar in the office is also suffering. To name one example, think of Xerox servicing copy machines (ink, paper, maintenance). The forced shift to the cyberspace is killing the business supporting the world of atoms. Some are speculating that this business will not recover, at least not to the levels it had reached before the pandemic, since people and companies have discovered a new, and in some cases less expensive way of running their business.

However, whenever we are saying that something is leading to efficiency, cutting cost, we are also saying that someone is losing revenues, and this is clearly the case here.

Going back to the 2 billion of coffee losses, one can argue that white collars will just shift their coffee-drinking addiction from the office to their home, so that the Starbucks of the world can still sell their coffee, they just have to deliver it at home. This does not work. True, you may see an uptake in coffee orders on line but it is unlikely that it will make up for the loss of revenues of the brick and mortar stores where people where getting “value added coffee” (like the Frappucino) plus other stuff that just caught their eyes. Additionally the social aspects of drinking coffee vanishes, it is no longer you and colleagues, it is just you and that means -likely- less consumption (how many times it was one of your colleagues that pulled yoo out of your desk saying, let’s go have a coffee?

Add to this the fact that there are much less labour involved in not having to manage a physical location and you get the picture.

Coffee is just used as an example, of course, of a much more broader issue, the one of DX at work.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.