Updates to Our US Cafes
Select temporary cafe closures and furloughs due to Covid-19 financial impacts
Below is a condensed version of a letter sent to all US Blue Bottlers on July 31, 2020, by COO and President, North America, Karl Strovink
Dearest Blue Bottlers,
This marks the sixteenth weekly letter we’ve shared since first closing our US Cafes due to the Covid-19 pandemic more than four months ago. During this time we’ve discussed both the good news and the bad from each week, in every case seeking to demonstrate our commitment to transparency and care.
The following is an extremely difficult update, so let me get right to the point in as transparent a way as I know how. Effective today, July 31, 2020, and solely as a result of the temporary but steep financial impact of Covid-19, we are taking the following four actions:
1. We are temporarily closing these fourteen US cafes:
Northern California
2nd Street
California Street
Central Tower
Instagram
Mint Plaza
Sansome
New York City
Astor Place
Hudson Yards
Midtown North
Varick Street
Washington, DC
Midtown Center
Union Station
Boston and Cambridge
Harvard Square
The Exchange
2. As a direct result of these cafe closures, we are furloughing 112 employees, approximately 12 percent of our US staff, across both our Cafe and General and Administrative (G&A) teams. Those directly impacted by these furloughs and cafe team transitions have already been notified in one-on-one conversations.
3. We are temporarily freezing all external hiring until early October 2020.
4. We are freezing all merit pay increases and incentive programs for US team members for 2020 and our Leadership Team is taking a pay reduction averaging 25 percent through the balance of 2020.
This action to furlough has been an incredibly hard decision to make, as it directly impacts our people, the heartbeat of our brand and culture. As our commitment to guaranteeing full pay and benefits to all team members during this spring's closures demonstrated, despite the global pandemic, our primary objective has never been to reduce our operating costs. While it is heartbreaking to take these furlough actions, it is a business decision entirely provoked by Covid-19 and the related economic collapse in the US. It is also a necessary strategic decision to set us up for strength and continued growth in the long term.
I now want to make as clear as I can how we came to these decisions.
How we decided which cafes to temporarily close
Back in April, we set conservative estimates for our business recovery when reopening our US cafes. Fortunately, of today’s 67 open cafes (of our 72 total across the US), the majority are well on their way to recovery. These 14 cafes (9 that we are temporarily shuttering, and 5 that have yet to reopen since March) are all heavily reliant on now-shuttered offices, tourism centers, and universities, and therefore are experiencing unprecedented Covid-19-related drops in foot traffic. Through no fault of these cafe teams, these declines have translated into a financially untenable operating model. As many of these cafes are traditionally among our highest-earning cafes pre-Covid-19, we have every reason to believe these will eventually return to their former glory. But we also think it will take structural shifts in how the US is handling Covid-19 for them to recover.
How we determined who would be furloughEd
First, these temporary furloughs have nothing to do with job performance or strength of talent. Our goal with all our cafe closures and furloughs was to be as fair as possible to our teams. In designating team members, we used objective criteria based on status, tenure, department, role, and where applicable, cafe location. In keeping with our essential commitments to fairness and to a diverse workforce, we worked cross-functionally and dedicated internal resources to ensure our furlough selection process did not change the makeup of our diverse community.
Additionally, unlike a layoff, these furloughs are temporary in the hope we can bring all team members back and reopen these cafes as soon as the situation allows. In the meantime, we are taking care of our furloughed team members in the following ways:
How we are supporting our furloughed team members
We will be paying each furloughed team member an average of two weeks’ pay based on the last two pay periods, plus the balance of their PTO accrual. We will also be covering 100 percent of their existing medical, dental, and/or vision premiums (including for family enrollments) during the entire furlough period. In addition, we will continue their access to HealthAdvocate, a cost-free advocacy resource, and Concern EAP, a free resource that can be used to obtain counseling, legal, and other resources, as well as continued access to cafe and online discounts. We will be reaching out to furloughed team members monthly to keep them informed on their status and other company updates.
Next steps
Even though furloughs, unlike layoffs, are temporary, and these team members all remain Blue Bottlers, we will be working through the next three months without cherished, caring members of our community by our side at an incredibly difficult time for us all. In the days and weeks ahead, we will need collective strength and support to carry us all through, with a brighter future together as our guide.
As always, I am here and seek to listen and be transparent and honest in addressing any of your questions or concerns. To that end, starting next week, the Leadership Team and I will be hosting a series of gatherings to continue this conversation and share our plans for the future; more to come soon there. All team members are also welcome to contact me, their manager, their manager’s manager, or People Partner to pose questions or discuss any issues and be confident they will be handled with discretion and care.
Yours in trust,
Karl