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Starbucks Suspends Workers in Chile Due to Coronavirus Fear

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The coronavirus pandemic has rattled the global economy. Most companies around the world are undertaking measures to tackle this crisis. The Retail - Restaurants industry is bearing the brunt of the coronavirus (COVID-19) outbreak and Starbucks Corporation (SBUX - Free Report) isn’t immune to this trend. 

Per Reuters, the Starbucks franchise in Chile suspended labor contracts at more than 120 outlets in Chile to safeguard the health of its workers during the crisis situation. According to local media and a union, the suspension is likely to affect 1,600 people, representing almost 90% of the franchise's Chile workforce. 

Notably, the decision was taken after a new law was regulated by the government authorities of Chile. Per the law, the company was allowed to suspend labor contracts of their workers, in return for a limited unemployment benefit, until normal working conditions are restored across the country. 

Although the company still operates through pick-up and delivery services, its responsible measure aimed at safeguarding positions across the outlets in Chile, is likely to boost performance going ahead. So far this year, shares of the company have declined 28.2% compared with the industry’s fall of 27.6%.

Global Impact of Coronavirus

Apart from China, the deadly virus has spread in countries including the United States, Italy, South Korea, India, Israel, Saudi Arabia, Sweden, France, Denmark and Japan. In fact, cases of coronavirus have been reported across 208 countries and territories. Per management, its operations in Japan, South Korea and Italy have also been impacted by store closures and dismal traffic. 

Many companies hinted at business disruptions in the United States, China and across Asia due to the rampant spread of the deadly virus. The companies also warned of soft sales trends due to restaurant closures.

Other major restaurant companies like Yum China Holdings, Inc. (YUMC - Free Report) , Papa John's International, Inc. (PZZA - Free Report) and McDonald's Corporation (MCD - Free Report) are also affected by this pandemic.

Zacks Rank

Starbucks currently carries a Zacks rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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