Survey says: 73% of Americans believe Starbucks coffee is overpriced

Only 6% polled by Rasmussen Reports disagreed that the coffee was priced too high. Along with the perception of high prices, only 38% of the adults polled gave Starbucks a favorable rating, while 27% had an unfavorable view of the chain. About one-third of the respondents had no opinion. (Read the Star Tribune story)

Comments

[P.R.I.D.E.]

Here's my take on this "study"- if 76% rarely or never visit a Starbucks that were polled, how exactly do they know that our coffee is overpriced? My point is that there is a perception of being overpriced (aka Fourbucks) when the actual drip coffee price is really competitve. It is the perception that is killing us, but our (lame) stance on not getting involved in marketing (because we're too cool for it?) has not helped counter this factor...

[Anne]

Geeee, really? DUH! Let's compare: a large coffee from 7-11 (which I can customize all I want) vs. a large Starbucks' drip coffee. Personally, I get more for my $1.50 at 7-11 that I get for my $2 at Starbucks. And don't forget Time is Money too! I'm not about to waste 15 minutes in line at a Starbucks when I can go to the convenience store down the road and be in and out in a few minutes....

And don't get me started on the coffee beans....OUCH!

[Belle]

P.R.I.D.E.--I think your comment speak to a very real issue: there's a perception in the mind of the general public that the product is overpriced. That's absolutely a marketing problem, and one that at least as far as drip coffee goes, could be addressed through advertising and marketing.

With that said, I don't think that the price of Starbucks drip coffee is competitive with others in the marketplace. Again, it depends on who the consumer is making a comparison against. And yes, McDonald's and DD are probably two of the comparison points for many in the public. Even when I compare it to other local coffee houses I know, I think Starbucks drip still represents the high price end of the drip coffee spectrum--and PPR, while not a bad blend, may not be special enough in flavor to justify the higher price.

And once you get away from the drip section of the menu, Starbucks rapidly does move to more of the Fourbucks area. The issue for consumers may simply be that it isn't worth what they have to pay to get the product being put forward. That belief doesn't have to be based on a comparison to other coffee products, but simply that it's not worth the investment of those dollars against all other opportunities to spend.

Interesting data on price perceptions. But in the absence of knowing how those opinions have (or haven't) changed over time, I'm not sure what they tell us.

The most interesting tidbit I found in the article was that 80% of the respondents say the reason they go to Starbucks is for the coffee. Not to hang out, not for the experience, but for the coffee.

Perhaps the key message that should of value to Starbucks from this survey is: It's the COFFEE, stupid!

[mark]

50 cents? You're ranting about 50 cents? Haha. As far as crowds, your example is worthless. Convenient stores where I live are much more crowded than starbucks (people fueling their cars, etc.).

[Elizabeth]

Starbucks' product is only overpriced if the company would gain customers or revenue by lowering the price. The company has offered a number of deals lately, such as free syrups for registered cardholders and the $2/2PM deal, which lower the effective price. So it seems like the company is responding to price concerns already.

That said, if people don't think the product is worth it, they can always shop elsewhere - vote with their wallet!

[truck]

this survey seems to say what many people feel- that starbucks coffee etc just isn't worth it, at any price.

starbucks used to mean something elite, but now it's so ubiquitous that everyone's tried it. and it seems that most of america doesn't think it's worth what it costs in money, time etc.

starbucks certainly does have a perception problem- especially when in most cases you can get a better product cheaper somewhere not too far away.

starbucks developed the industry that we have today, but unfortunately (for starbucks- great for the rest of us) the coffee industry has far outpaced starbucks in every area. starbucks hasn't kept up. and doesn't even seem to know which direction to run in to try.

[sbux barrista]

It depends on the way you look at it. If you go to your local Tim Horton's for a $2.00 xlarge french vanilla cappuccino, you are going to get a $2.00 french vanilla cappuccino with a side of powder lumps. Which is why I stopped going there.

The first time I tried a tazo chai latte from Starbucks, it was like a dream. It wasn't lumpy or too syrupy or too milky, it was perfect and that was because the barristas at Starbucks take pride in their drink making so that you always have the best "bang for your buck".

It is worth it in the long run. I know that you will never step out of my Starbucks after paying $3.99 for a latte and say "I completely regret going there - I should have gone to Tim Horton's for a cheap coffee."

[Belle]

Elizabeth--the $2 after 2 deal only offers value to those who think it's worth coming in twice a day. If someone's not coming in once a day because they don't think the product has enough value, a promotion that says you have to come in twice a day to get a deal may not be sufficiently enticing. (Plus the inconvenience of having to keep those silly paper receipts!)

The free shot of syrup/choice of milk options only entice those consumers who like those in their coffee-many people don't. And it requires that people tie up their cash in a Starbucks card. Which is great for regular customers, but is a commitment unlikely to get non-regulars in the door. The idea of having to hand over 10 or 20 bucks in order to get a 30 cent pump free--and have to use that card to pay for the purchase (one more thing to fill up a wallet or purse) may not be enticing for a market segment that already sees the product as pricey.

It doesn't have to be a cheap product to get people to put their money down. But if it's going to command a premium price, it needs to be perceived as a high value/high quality product.

[Mary Coffin Starbucks]

What is causing the stock to go up....?

[Joe N]

I agree with sbux barrista-- The Tim Horton's French Vanilla Cappuccino comes pre-made out of a machine there couldn't be a bigger misnomer than calling that a Cappuccino. Yet most of the people I know are Tim's loyalists and swear by their coffee. I think it's somewhat a patriotic thing here in Canada, most of the people I know are happy with there $1.50 double double from Tim's or their powder-mix "Cappuccinos" and balk at the extra few cents for a Starbucks drip that actually tastes like coffee! and freak out at the price of an espresso based drink.

[Billy]

Mary, Wall Street loves job cuts. It means less overhead and higher profit margins. That's why the stocks goin up. Sucks for the laid of workers though.

[Stan]

Starbucks Pike Place Roast is a cheap, awful drip coffee sold at a premium price. It is the only drip coffee at Starbucks available all the time.

[AJC]

Starbucks is EQUAL to the HUMMER- neither will be in style again- you can put as much lipstick on as you want -you are still a pig.

[Todd]

Slightly off topic but how do the 'free' syrups work with a registered card? When I go through a drive thru I don't think I *ever* get a cheaper price, even when my SBUX card is swiped at the register. Does it only work if you go in and present it at the counter when ordering?

[omg]

make sure you tell them to run it on card benefits first

[omg]

it should take it off automatically but if you tell them to run it on card benefits first than youll see that discount on the receipt

[omg]

it should say "nc" where the syrup is on your drink this means no charge

[StLouieDrip]

Elizabeth: if people don't think the product is worth it, they can always shop elsewhere - vote with their wallet!

They(we) are already doing that. It's why 76% rarely or never visit sbux. And it's also why 600 stores are closing, because of a decline in "votes."

Sbux barrista: I know that you will never step out of my Starbucks after paying $3.99 for a latte and say "I completely regret going there - I should have gone to Tim Horton's for a cheap coffee."

Maybe not at your store, but I've definitely been to quite a few where I regretted it. Besides, it doesn't really work to compare a latte to a coffee. But try comparing a latte to a latte, and a coffee to a coffee, because that's how most customers tend assess comparable value.

Joe N: ... balk at the extra few cents for a Starbucks drip that actually tastes like coffee!

Um, sbux also has a drip that doesn't taste like coffee, served every day, all day. But I recently had Sulawesi at an indy and I didn't balk at all when it cost me 30 cents more than sbux.

[coffeebean]

If "overpriced" means "I can't afford it" then that's fair enough. To say that it's "overpriced" because "it's cheaper in McDonald's" neglects to take into consideration that people don't go to Starbucks for the coffee alone (unless that's changing.) Starbucks provides value beyond the coffee, because what's a latte but "milk and coffee", that alone doesn't justify 4 dollars yet starbucks is showing a loss. All the similar coffee shops charge pretty much the same as starbucks, but compare apples to apples. Lets face it, serving coffee from a prime real estate location doesn't have a zero cost. Starbucks is just about everywhere (that doesn't come for free), that means convenience and there is a segment of the market that is willing to pay for that (even an extra dollar or two) simply because it's worth it. I think that starbucks will have to move to a model where it charges more at prime locations and less in places where people go to starbucks for "just the coffee".

[Redd]

Is this still news? Are people really STILL complaining about the price of Starbucks like it's a new problem? Of course people think it's too expensive...I'm inclined to agree. Before I worked here, I only got Starbucks once or twice a week...mainly b/c of the price, but also b/c I didn't know what all they offered. But should I leave Starbucks, I will definitely frequent it more often, but mainly b/c I know what they have and how to order something that isn't quite as expensive. And it is tons better than the convienience store offerings in my area...and no more expensive than the indie shop! And I've never been to an indie shop with employess who are as friendly as we are with our customers...but then again, I haven't been to every indie shop in the world! I agree that people are paying for the experience...it's just sad that there are a lot of Starbucks out there who aren't delivering the right experience.

[johnh]

When I can/could get Bold brewed coffee I thought it was priced fairly. I won't pay for the Pikes Place however and have stopped visiting in the afternoons..

[Ellen]

It's irrelevant what the non-targets think. What's relevant is if a business can be built around a core of people who find it a perfectly fine value proposition. Clearly that's happening.

It's about as dumb as saying that Mercedes are overpriced. Does Mercedes give a damn as long as their core customer values Mercedes and pays the price?

[Decaf Drinker]

The perception is $4 for coffee is alot. The reality is, because of our economy right now - that $4 is alot! When purse strings have to be tightened in someone's home, everything is looked at.

I was one who was in twice a day, until my husband told me 'dear we can't do this anymore'. At the same time, I was driving 44 mlles to work in a Ford Escape and filling up 3 times a week. The Escape was traded in - the coffee was eliminated.

It's a treat for me now, and unfortunately the brand new store that opened quite close to my house has terrible service - thus not even remotely enticing me to come back. Last week my son and I stood in an empty store with 3 baristas in the store behind the counter, 1 car at DT - it took 8 minutes to acknowledge our presence in the store.

I understand downsizing, my best friend was downsized after 38 years at the same company. In HR - she was told her job was eliminated, and that someone had packed her desk...not even allowed to go back and get her things - so it's ugly everywhere.

I miss my Starbucks experience, but I understand whats going on in business has to affect the attitudes of employees there.

Starbucks can't only focus on coffee, they need to focus on employee morale - you guys are the first line for the company!

[whysoserious]

Dont forget to look at it the other way around. Sure 76% arent going. So 1 in every 4 are. Thats still a lot.

[JMW]

I don't see why this is a problem. 76% don't go? Good. That means the company still has some brand identity left. Brand identity means, definitively, NOT FOR EVERYONE.

In fact it's by trying to appeal to everyone, that the company loses.

So lots of people think Starbucks is overpriced. So what?

I bet lots of people think Porsche is overpriced, too. But they're Porsche -- do you really think they should lower their price (and therefore standards) capture the market for everyone?

Starbucks needs to milk this trend and make it 85% of people who don't go and 15% who go more often, and spend more because they "get" the brand. That's how they'll win.

[coff]

Starbucks is clearly not the same company it used to be when it used to appeal just to the elite, it now serves coffee to the masses. The expansion that took place over the years was based in part on serving those "poor" that can only afford indulgences in good economic times. I partly agree with others who said "who cares about the 76%" yes they are not targets, but a certain small amount in that 76% are ex-customers who can't afford it anymore. Problem is that for Starbucks to recapture those customers it would have to change the business model completely (i.e. appeal to the 76% segment), I dont think starbucks is about to do this. Starbucks is doing exactly what I would expect, closing those stores where people can't afford a $4 latte anymore.

[njbarista]

I don't think a lot of people are actually aware of why Starbucks coffee is so overpriced. If you really examine the details, you are getting a quality cup of coffee for your money. Whether high quality or low quality suits your taste buds is a matter of another discussion.

For example, a 20 oz. coffee is $2.09 at my Bux. That's really not horrendously expensive. And you're consistently getting a fresh, hot cup of joe that was ground just that morning and brewed less than 30 minutes ago, complete with a smile from your barista.

I'm pretty sure Dunkin Donuts or Mcdonalds gives you dirty dishwater coffee hopefully brewed sometime in the last twelve hours, half of the time served to you by someone who can't speak English.

Many customers also don't realize that SBux pairs up with smaller coffee growers in order to get more quality beans and encourage economic sustainability in lower class countries. They really do put a lot of time and effort into the whole bean offerings, which is why it's important that these coffees remain at the core of the company because that's where the true brilliance, quality and consistency of the Bux comes in. It's the non-coffee drinks that worry me.

But keep in mind how much milk we go through a day for your lattes, frapps and Vivs. Dairy isn't exactly cheap nowadays so it's not like we're getting a bargain price and charging you whatever the hell we feel like. Sadly, the economy isn't giving everyone the chance to drink from the Bux every day. But then again, not everyone can shop at the Coach store every week either.

"And you're consistently getting a fresh, hot cup of joe that was ground just that morning and brewed less than 30 minutes ago"

Pike Place Roast:(

[Koolaid Stained]

Sounds pretty accurate to me...I truly believe 94% of the general public does NOT know the cost of REAL quality and ethical business practices.

[Torontodude]

Wow! At last a constructive thread (sans bitching) with astute comments all round.

As a Canadian, I have to weigh in on the great Tim Horton's debate. There is a bit of a Tim's cult here. Which is nuts since's Tim's is owned by a US corporation (Wendy"s) and its donuts are made from frozen dough. But Tim's somehow became identified with Canadian nationalism and patriotism. It even got strong-armed into setting up shop for Canadian soldiers in Afghanistan. And contrasting Tim's customers and Starbucks customers has become a facile bit of political shorthand for lazy reporters writing about social issues.

All that said, Starbucks could do a lot more to target Tim's customers. An advertising campaign could focus on the free refills. I doubt there is one Tim's customer in a hundred who knows about it. Most think Starbucks is for rich, stupid people who lead empty lives and pay $4-5 for ridiculous drinks.

Plenty of Tim's customers order two "extra larges" and pay
$3.30. They could get the same amount of better coffee at Starbucks for $2.26 -- if only they knew about it. Trust me on this. I have been running my own private focus group. The result to date: two taxi drivers and three Tim's cashiers were astounded by the free refills at Starbucks. All said they would check it out.

And plenty of Tim's customers already have "Tim Cards" even though they get no price break. So the idea of buying pre-paid cards wouldn't be new to them.

Conclusion: There is a big unexploited opportunity here.

And my consulting bill will be in the mail.

[Belle]

I get a kick out the analogies to Porche, Coach and Mercedes. Starbucks isn't one of those brands. Call me when Coach puts in a drive-thru or Porche and Mercedes sell their core product in my local supermarket.

Starbucks lost the concept of being "elite" when they over-saturated the market with their product. When you can buy a bag of Starbucks coffee and ancillary products at Walmart, it's nearly impossible to maintain the illusion of being elite.

Starbucks has affiliated its brand so widely that they've dilluted the cachet of the brand. A brand is known by who they affilate with.

I do agree that Starbucks needs to rally their base constituency. They certainly need to hold that core market together. What we don't know from that survey is how the percentage of those who do and don't go to Starbucks has changed over time. If that 76% is an increase in the number of disinterested consumers, that's a problem and Starbucks should probably care.

While it would be nice if people realized how much all the elements of Starbucks cost and how that translates into their price point, what really matters is whether the consumer (those who are current market or potential market) perceive the product as being worth the price. If it's not a great product, it probably won't matter to the consumer why it costs what it costs.

[Joe N]

Torontodude -- Excellent points, I'm in Toronto too and witnessed first hand the elitist perception of Starbucks patrons from Tim's patrons. Recently a Starbucks opened adjacent to a Tim Hortons in my area, I was sitting on the patio outside Starbucks with some people who had purchased their Tim Hortons beverages and were enjoying them on Starbucks' patio. I over heard someone say while pointing across the street at the Tim's "that's the poor area, this (Starbucks) is the rich area" this struck me as funny. And I do believe this is do to a lack of awareness and lack of promotion on the part of Starbucks.

[drive]

I think sbux is overpriced and I kind of feel bad about charging so much, especially if the customers seem like they aren't especially well-off. In my store, we have taxi drivers and bus drivers who come in daily for coffee. These guys are unionized, but still don't make a whole lot. I sometimes feel I am committing highway robbery when I ring their purchases up. Especially if the pastries are a little stale or the urns are dirty, as they often are.

[njbarista]

"While it would be nice if people realized how much all the elements of Starbucks cost and how that translates into their price point, what really matters is whether the consumer (those who are current market or potential market) perceive the product as being worth the price. If it's not a great product, it probably won't matter to the consumer why it costs what it costs."

Good point, Belle. I think it's more of a point of what appeals to consumer tastes. SBux makes the effort to provide quality coffee, whether or not people like it is a luck of the draw.

And about the SBux coffee in Wal-Mart, I wonder if Starbucks actually markets it to them or if Wal-Mart buys it and arranges into cofee lover's baskets in order to appeal to a higher class of people? I feel like that's odd of Starbucks to sell their coffee outside their own stores.

[Posted by:]

Yeah, you can probably get a cheaper cup of coffee in many different places. But, I wonder. Do those places re-brew their coffee when a certain amount of time has elapsed or only when they run out? Think about it. At a gas station, that coffee they serve could have been sitting there for hours! I'll take quality over quantity any day of the week!

[bucked]

I feel like that's odd of Starbucks to sell their coffee outside their own stores.

HA That's rich!

Starbucks is still a lightweight when viewed in the context of the global coffee industry. The company claims only 2% (TWO percent) marketshare globally. Who are the true bighitters? Nestle, which owns Hills Bros and MJB, Kraft and other large agribusiness companies. And where are they selling their beans? In grocery store aisles. That's still the place where most beans are purchased. Initially, starbucks hesitated to jump into this market because of just such brand erosion. didn't want people to see their beans next to maxwell house. But, alas, the lure of the almighty dollar proved to strong to resist and so we can buy "premium" beans at wal-mart.

"I'll take quality over quantity any day of the week!"

Pike Place Roast is quality?

[Cali ASM]

I agree with the dialogue being exchanged here.

When I first heard of Starbucks I thought it was extremely high class. I thought only rich people drank that coffee.

When I first started working there it was almost the same feeling: only wealthy people came here and bought expensive coffee and coffee-based drinks.

Now I actually put Starbucks in the same sentence as Wal-Mart, McDonald's, Burger King, and all of the other fast food and discount chains.

How sad is that? To this day I still consider Neiman-Marcus, Nordstrom, and Saks Fifth Avenue as the places where rich people shop. No longer can I put Starbucks in this category.

I don't know maybe I'm being discriminatory here, but this was my opinion.

I guess there's nothing wrong with changing what kind of customers you cater to but if that's the case then Starbucks should just be up front and honest about it.

[Jamie]

The elitism toward customers or former customers, by baristas who make what, $8 an hour, is stunning, and even funny. Bottom line is, there is no business without customers, and if 76 percent of the population believe Starbucks is too expensive, more stores will close and fewer will open.

I used to have a once a day Sbux habit but am happily ensconced at home with my french press and my espresso machine.

[#1]

"I'll take quality over quantity any day of the week!"

Me too!!

Quality of beans
Quality of roast
Quality of espresso
Quality of service
Quality of atmosphere

Sorry, but a Starbucks "cappuccino" doesn't meet my standards of quality.

[Ellen]

"I get a kick out the analogies to Porche, Coach and Mercedes. Starbucks isn't one of those brands. Call me when Coach puts in a drive-thru or Porche and Mercedes sell their core product in my local supermarket."

Actually I think SB is very much like Coach. Every suburban mall and every suburban mommy has a Coach purse. It's affordable upscale, not upscale-upscale like Porsche and Mercedes.

[NewbieSM]

I'm sort of sad to see the last issue of the 'MyBrew" newsletter. :-(

[#1]

"Actually I think SB is very much like Coach. Every suburban mall and every suburban mommy has a Coach purse. It's affordable upscale, not upscale-upscale like Porsche and Mercedes."

I think the point is... Starbucks is no longer upscale.

Good news for all lovers of COACH, though. If you save your receipt from an earlier purchase you can return later in the day and purchase a special-edition purse for only $50. Be sure to pay with your registered, pre-loaded COACH card and you'll receive a free key chain.

[truck]

name one other upscale"luxury" item that you procure through a drive through...

[Melody]

It seems like there are 2 different issues here getting merged together: Is Starbucks a premium brand or an elite brand and is Starbucks expensive (at least in the public perception)? Obviously the two issues are tied together but might not have the same answers.

Of course everyone who pointed to the gross mistakes that Starbucks made in the last say 5 to 10 years is right on about why Starbucks is slipping away as an elite brand: Dilution due to licenses, having their coffee available everywhere like grocery stores or Costco, too big and too common and so on ...

But are they expensive? The public perception of this is a little more out of line than reality. I suppose if you're addicted to a Venti Frappuccino then you're going to be spendy a lot of money on your habit. But if you really just want a cup of coffee (and you find a store brewing something other than PPR) then you know, it's NOT expensive.

And as for whole bean prices, look around: Some of the exquisite small roasters charge more per pound than Starbucks. Starbucks is competitively priced. Just look at the grocery store aisle (I assume everyone has a million options for coffee not in cans) and Starbucks is about the same.

It's the fancy sugar-espresso-beverage drinkers that intensify the perception that Starbucks is expensive, as far as I'm concerned.

But we always come back to the same thing: Either Starbucks will turn into a fast food beverage business OR it re-focus on coffee, get rid of a number of licensed locations, pull some of the flavor-lock bags of beans out of places like Wal-Mart, and heck, I'd get rid of the PR nightmare called mystarbucksidea.com.

Howard are you listening? We put a ton of faith in you in January, and 8 months later, we're feeling disillusioned.

[Equalamongequals]

The comparisons to brands like Porsche and Mercedes aren't accurate, mostly because most people can't be an "occasional" Porsche customer.

Starbucks is in a unique place economically because their product is cheap enough (despite its high price point relative to competition, including the coffee brewer at home) that in good economic times even people on the low end of the earnings spectrum can afford Starbucks occasionally. Starbucks growth strategy and some of their new locations were reliant on this type of customer, and as much as those customers may want to buy Starbucks, right not they just can't.

[inopethflames]

i dont even know what regular coffee costs at starbucks, i only usually get iced lattes, otherwise hot lattes / frappucinos / ice coffee & iced americanos.

i think the main thing is that starbucks is cheaper or the same as every other coffee-house, but people just think the prices are too high to start with. not to mention starbucks is synonymous with the joke that its too expensive.

[Catherine]

*ONLY* 73%? ;)

[Marcus]

Just had the second Vivanno of my life. Wanted a good start to the day. It was so crowded I checked twice to make sure they heard me say 1 shot of espresso in it. They didn't make the drink until long after it was called and even though it was marked as 1 shot I didn't taste the espresso like the first time I had it. There was also two huge chunks of frozen banana at the bottom of the cup that never blended in.

I'm not sure if I got my espresso or not now, which is annoying. I called and they said they would make me another drink if I come back in, but I only let myself have a maximum of one shot of espresso per day due to anxiety issues.

[Torontodude]

At the annual meeting, HS remarked in an aside that selling Starbucks coffee outside of Starbucks locations is a billion dollar a year business -- but it's seldom discussed.

To those who think it should be dropped, I would ask:
how do you suggest the revenue be replaced? Remember, Starbucks is a public company and Wall Street is clamoring for every last penny in revenue.