Starbucks will raise the prices of several popular drinks all over the United States due to a number of reasons. It is the third straight year that Starbucks has increased the cost of its offerings.
On July 12, 2016, Starbucks increased the prices of certain items by as much as 30 percent. According to the giant cafe chain, the increasing costs of coffee, as well as the recent raise of their employees are among the main reasons for the big bump.
Several companies around the country have been implementing employee wage hikes in the past few months with Starbucks apparently joining the trend.
On July 11, Starbucks announced that it will give its store managers and employees in the U.S. a raise of about five to 15 percent in fall 2016. The need for an employee wage hike has risen due to the pressure to boost customer service, as well as the dropping availability of talented workers.
Furthermore, the high demand for coffee has resulted to more expensive beans. Other reasons include higher rent, marketing and commodities.
Wall Street Journal wrote that in April 2016, Starbucks reported a profit increase of 16 percent as it drew more mobile users all over the U.S. Meanwhile, raw coffee has become more expensive.
Arabica coffee has particularly become more expensive due to the growing demand in other countries like China.
Fortune revealed that beginning on Tuesday, Starbucks will introduce an increase of 10 to 20 cents on certain sizes of brewed coffee. Starbucks espresso drinks and tea lattes will be upped by 10 to 30 percent. However, the costs of 65 percent of its drinks remained the same.
According to Starbucks, customers will spend about one percent more for each visit. The increases will vary by market.
Starbucks stated that pricing is constantly evaluated on a product-by-product and market-by-market basis in their stores to balance business needs, while continuing to offer value to their loyal customers. Starbucks reportedly tried to offset the price increases by referring to the bargains that customers can avail of through its loyalty program.
Some company-operated stores were required to prematurely launch the price increase into their point-of-sale systems to cope with the market changes. Starbucks eventually had to inform everyone about the needed rise in costs via an official announcement.
So far, customers seemed to have taken the Starbucks price increase well. More updates and details on Starbucks are expected soon.