Starbucks to raise drink and bean prices on Oct. 3

As Starbucks employees get a little extra in their paychecks, customers will be digging a bit deeper into their pockets to pay for their coffee. Starbucks says it's raising most beverage prices at its U.S. and Canadian coffee shops by 5 cents on Oct. 3 to help offset increased costs for fuel and labor. Starbucks is also raising prices on most of its whole bean coffees by 50 cents a pound, or about 3.9 percent. (Read the story at seattlepi.com)
> Starbucks says price increase not directly related to wage increases

Comments

[T]

Yep, we all had to read a memo about this today. Basically just telling us why it's happening, that it's been in the works for a long time and how to handle Q's from our customers.

Ah, so this is where they're going to get the money to give people "raises."

[JustABarista]

Honestly, due to the long lines at my store at ALL hours, I have been saying it's time to raise prices for a while. The price points are too low if you're lining customers up to the point where demand is outstripping supply. The pricepoint curve has been neglected for far too long.

[Deusx]

There hasn't been a price increase in how many years? People will bitch though, it is their god given right to have luxury coffee drinks! How dare a company raise prices once every three years or so, who does Starbucks thing it is, Exxon?

I hope they raise Frappuccino drinks like $2.50

[AZBarista]

Maybe that's why they rushed to tell us not to say anything about our raises. :-p

It's not that surprising--there was a small raise in prices about this time a couple of years ago to keep pace with the rising cost of healthcare. Starbucks hasn't slowed it's growth down at all--and that can get expensive! It shouldn't be surprising to see prices go up by small amounts to make up for that. If they raise them too high, the market will correct itself and demand will slowly drop. That will drop (or at least straighten) the level of growth and corporate expenses should go down. And so would prices. Ahh, the beauty of economics.

2 things bad about this:

a) Since everybody knows about the raises now, bitter "I want to come to Starbucks but I shouldn't have to pay this much" customers are going to take it out on ME personally. That'll be fun.

b) I'll have to start using the expiditor till at drive thru again since I won't have the prices memorized anymore. So long super-know-it-all barista :-(

[JustABarista]

It's funny how people will bitch and moan about a five cent price hike in unnecessary indulgences, but I've been to the supermarket and seen the price of a dozen eggs fluctuate by twenty cents or the price of milk by about fifty cents, yet I NEVER heard anybody bitch about that.

[Howie Schultz]

I think this is a great move. Including the labor reason in the decision and timing the raises with the price increase allows for a win-win situation for Starbucks. They get to address the top concern that partners say would make them happier without having to reach into the pockets of shareholders. Cancelling Costa Rica + this price increase makes this essentially a "free total pay upgrade" for them. By doing this, they get the immediate return on each drink sold and they get the long term return by ensuring partner morale is high, so they have an attitude that creates the "third place."

Kudos to SBUX on this one! :)

[coffeeguy]

well foods gotten more expensive all around the last few months.

Not a huge surprise here. Gotta pay the farmers a fair wage.

[James the Barista]

Can't say I didn't see it coming? The first words out my mouth went I hear about the raise was if they were going to raise the prices...think about it though...5 cents per drink times the times of drinks per store...times the stores that are company owned. Lets just see how its all going to play out...

[Lauren]

If I do remember right it was October 8th of last year that they raised prices an average of 8 cents. So long latte of $3.04, welcome $3.15. I too am disheartened that I will have to memorize new prices again.

And...a business is like a small economy. You can't claim money from one place only goes to another -- hell maybe this goes to point A and our raises came out of G. Lest ye be watching financial cash flows really carefully -- it's hard to tell.

[Jimmy Chang in NYC]

Remember all those comments about "ghetto lattes"?

Now everyone is paying for some peoples' cheap antics.

hahahahahahahahahahahaah

And the stock price is movin up!

[SeattleAreaManager]

It has been 2 years since Starbucks raised the prices. Last time it was a 10 cent raise.

I believe that 10 cent hike in price two years ago was only in Seattle...it was due to the "latte tax," remember?

[myke]

ok so i did some math if u buy 2 drinks a week the 5 cents will only add up to $5.20 a year i really think ppl can afford that not to mention were going to be doing that reciete thing now so that alone will be some free drinks

[STARBUCKS GOSSIP webmaster]

The price hike two years ago WASN'T only in Seattle -- it was nationwide. It was implemented October 6, 2004. Here's a story about it that was linked on STARBUCKS GOSSIP at the time.

[Kevin Tweedy]

Raising prices? Here on the island of Kauai in Hawaii we have two Starbucks outlets and I've finally figured out why I've been having problems with DEPTH PERCEPTION when I visit one oor the other: SURPRISE! The three drink sizes are all down-sized here! Apparently, to keep the Kauai prices in line with the mainland, some brilliant exec decided to just down-size all three one notch! (I sent a question on this in to the Starbucks website and so far have not heard any response. I'm sure this is an aspect of doing business in the Aloha State that Starbucks would just rather not talk about!) The net of the matter is that there isn't a true Venti Frappuccino anything -- which makes you wonder why they bother to have the tall model of those straws!

:) onward! (and downward!)

Raising the drink and bean prices are absurd...do you guys realize how much profit per drink and pound of beans Starbucks actually makes already? They are already charging anywhere from $9.95 per pound of coffee and up and only pay approx. $1.20-$1.40 per pound. You guys will get more than a little backlash from your customer base as so many of your customer base are becoming more and more knowledgable about the coffee industry. How about taking some of Howard Shultz's $1.1 billion, along with some of your district managers, regional directors, and other upper level management bonus money and use that to fund these raises? These are the people that profit so much from your hard work and from your customer flow....think about it, it might save some grief from your customers, who are afterall supposed to come first.

[imabarista]

It's the rise in bean prices that impresses me. I am looking at the bottom line: Each store will sell fewer beans at the higher prices (tougher to meet budget, lower bonuses) but the company will gross more.

Right?

$1.20-$1.40/lb is the price the company pays for green beans sitting in forgein countries, they have to transported to the roasting plant, roasted, packaged, trasnported to a distribution center, then transported to stores where they are put on the shelf. There is a lot of labor and transport cost in there, not to mention the cost of sending people down to orgin countries to find high quality beans.

[Stan Flouride]

When someone complains just say, "It's Cheney's fault."

That's what I say when people ask why plywood has more than tripled in cost over the last few years.
While not exactly true (it's actually a combination of demand from hurricane repair and Iraq) it seems to assuage even the most incensed and irate customer

Hahaha! Silly customers get to pay for our raises and benefits. 5 cents is nothing to them, but to me, it's the raise that puts gas in my car and keeps my health insurance going. Thanks Starbucks!

I've seen many price increases at SBUX and I have always told those FEW customers that complain a little funny remark. "kids are able to have breakfast, lunch and dinner now" or "I don't come cheap, do you". All of our customers have seen pay raises, price increases in their jobs or a family members jobs.
And the comment on 1.40 per lb do you know how much it cost to make a bagel .03, 1 dz bagels .36, I pay 6.75 per dz.

[mpb]

If my $0.05 per latte goes into the pockets of the friendly people making my drink, then I'm happy to pay it.

[Jon]

Any votes for $15 Frappuccinos?

[ray]

well do what you wish...dunkin donuts , starr bucks what ever, home brew and the comfort of home is still better and no lines and the price ...well....priceless.

[Mia]

I honestly don't mind the nickle increase. But what I do mind is that I am paying 40 cents extra for soy milk. I drink soy because I can not drink milk so that price increase is really 45 cents for me. It probably won't stop me from buying my 2 or 3 mochas a week but I will probably think twice about spending the extra money on the baked goods.

[jgr]

you people have got to be kidding me. first of all you take your job way too seriously.... you work at a friggin coffee shop for god sakes. Barista? WTF?

The people who will complain about a nickel increase are the same ones who will drive ten miles out of their way just to save 2 cents a gallon on a tank of gas.

I predict slightly lower tip counts since it is the change back that usually gets tossed in.

[Alex]

does anyone know how much an average store makes per day in Chicago?
I am not looking for specifics, just an estimate.

Its pretty funny that people are complaining about price increases. And starbucks is loosing it a bit with first sending out an email with that coupon and then also giving a raise and then increasing prices all in the same 2 months.
The PR Department seems to be loosing it's touch.

[RjD]

People don't mind paying more if they feel they are getting value for that money. So long as the products, atmosphere and service are as good or better the majority of people probably won't care. That said, you still can't blame folks for an initial bad reaction and employees will have to take it in stride.

[addicted to the bean]

Did anyone get the memo that magically in one day the cost of coffee beans went up?

Gosh I better get some Folgers or MJB as THAT price will be going up too!

Juan Valdez is moving up from one beast of burden to two....

[mickeyd]

You poor souls, I pay $.76 per cup of coffee at McDonalds-all I can drink (free refills). I stopped going to Starbux 'cause I couldn't get a NORMAL cup of coffee.

[imabarista]

Mickey-76 cents is too much for a 'normal' cup of coffee.

[MickeyD]

Not really, Imabarista. I buy my own paper, and sit in their restuarant, and have 3 cups. Average price is $.25/cup-a deal for me.

In addiiton, this McDonalds has video games supplied for the customers!

[MickeyD]

Not really, Imabarista. I buy my own paper, and sit in their restuarant, and have 3 cups. Average price is $.25/cup-a deal for me.

In addition, this McDonalds has video games supplied for the customers!

[Evelyn]

Who cares - it's just a fad and it's overpriced already! I don't spend my hard earned money there.

[STARBUCKS GOSSIP webmaster]

Um, Evelyn, Starbucks has been around for 35 years. A fad?

[Lauren]

And I have to admit, McDo's has a GREAT atmosphere. Red and yellow plastic seats with a creepy clown (some sort of fiberglass) staring at me? AW MAN, that's what I want.

If I didn't work there -- I'd frequent there less, yes. But it doesn't matter, it's a MC=MB kind of thing and for me MC

Companies are there to make a profit, and companies around the world (even the McDo's *gasp* have raised their prices) -- and in all irony, how do we know what their margin on coffee is? It might be the exact same as ours for all we know. Or it might not.

The point is -- company raised prices. I'll have a cup of change at the register that says "regular customers who haven't assimilated yet" and you'll get your latte.

It's a nickel. Even our most devoted customers, who come twice a day, and get two drinks, will spend $26 a year. If they stopped coming to Starbucks they'd save about $400 a year. Life goes on, prices go up, people survive.

[Lauren]

(HTML ate my post! It's supposed to say Marginal Cost outweighs Marginal Benefit)

[sbuxgrrl]

Alex said, "The PR department seems to be loosing it's touch." (I won't correct the spelling and grammar.) I would beg to differ, because the PR (Partner Resources) department who strongly supported the awesome initiative to fairly compensate our partners. Here's the bottom line: If customers had not been ordering ghetto lattes and asking for "extra, extra, extra caramel" on their "caramel macchachino" (or whatever ignorant name they call our drinks because they can't read the menu boards), then Starbucks would not be raising their prices. The price increase pays for: wasted caramel to which people feel entitled, wasted half and half to which people feel entitled, and wasted sleeves which people feel that they need on their drinks because it makes them look cool.

[STARBUCKS GOSSIP webmaster]

I believe he means PUBLIC RELATIONS department, not PARTNER RESOURCES.

[sbuxgrrl]

Public Relations...hmm...isn't that the same thing as MARKETING?

[someone]

hmmmm....ah, nope.

[Becca]

The sad thing is, up here in Canada, prices dropped a few months back due to a GST cut. Was anyone happy or excited about it? Nope. People were either annoyed because they knew the old price and had their money ready, or they said that our coffee cost so damn much, it was about time it dropped. This price jump will bring prices to the old prices, or 2 -3 cents more. Honestly, what's 2-3 cents?

Dude. It's a nickle. Gas prices can go up more than that in the span of a day. And, unlike gas, if that nickle's gonna break you, you can always skip a latte or two a week.

Everybody take a deep breath. It's not a scam, it's not a conspiracy, it's ECONOMICS.

You guys need to be aware that Starbucks customers read this blog as much as its' partners do. Some of you are underestimating and even belittling your guests, who are the ones this increase will affect the most. Please do not give cause for more bad press. Just accept the change and explain to your guests that there have been changes to the pricing, and if you need to explain further please be aware of the company policy on release of information.

[jabanga]

i started at starbucks eight years ago and while there have been price increases on drinks every couple of years i do believe this is the first price increase on beans in the entire time. i always thought it was pretty impressive that they went so long without increasing the price of beans while everyone else did.

[not needed]

No offense, folks, but when the price of gas went through the roof this year, I found three- and four-dollar coffee drinks to be the single easiest thing to cut out of my budget. This former daily Starbucks drinker is down to once or twice per week and raising the price certainly isn't going to get me back in the door more often.

[-m]

Five cents is nothing. This is a non-issue. Inflation happens people. Prices for everything from eggs to petrol has more than DOUBLED in the last 35 years. The cost for a cup of the world's finest coffee has only gone up 22% in the last 35 years. In 1971, a gallon of milk was $1.18. Today, a gallon of milk averages $3.72 nation wide. Is any of this making sense to you? You're paying a 1982 price for a cup of coffe.