Why Starbucks is raising its prices

Customers can expect to see a small increase on the menu starting next week.

By Kim Peterson Jun 21, 2013 2:10PM
A Starbucks Corp., sign is displayed outside a coffee shop in London, U.K. / Chris Ratcliffe/Bloomberg via Getty ImagesThe cost of coffee beans has been trending down. So why is Starbucks (SBUX) raising its prices?

The company says other costs are going up, including rental rates for its stores, labor for employees and prices for non-coffee ingredients, according to The Wall Street Journal.

It might also have to do with that little price cut in May, when Starbucks lowered the cost of the packaged coffee sold at its stores by about 10% to stay competitive with rivals.

At any rate, most customers probably won't notice the difference, which rolls out Tuesday. The largest increase will be only about 10 cents, and fewer than a third of all beverages will see an increase. That amounts to an overall 1% increase in prices, on average.

Some stores will raise the price of a tall brewed coffee by 10 cents, for example. But the prices of medium and large brewed coffees and Frappuccinos are not expected to change in most locations, according to The Associated Press.

Starbucks was quick to note that this is the first price increase on its menu in nearly two years for some markets.

Coffee costs have been on a wild ride for some time. Last year, in fact, Starbucks paid $1.4 billion for coffee beans, according to an analyst at Janney Montgomery Scott, AP reported. But the company has found some relief as prices have declined recently. The analyst thinks Starbucks will benefit from lower coffee costs for the next few years.

More on moneyNOW

101Comments
Jun 21, 2013 2:57PM
avatar

What else is new?  Prices on everything we buy  have gone up.  Either that or the size of the product is downsized and the price stays the same.  

Jun 21, 2013 3:10PM
avatar
I used to go to Starbucks every day, and get a grande white mocha at about $3.75 a pop. I hated the straight coffee drink, so that was not an option.

When I calculated how much I was spending, because on the weekends, I might go twice a day, it was ridiculous how much money I was spending. So, I cut down to 3 days a week, then 1 day a week, then once a month, and now once every two months or so.

I bought a french press, generic coffee, french vanilla creamer, and make my own.

I save money, and calories. 

And surprise - I really don't miss Starbucks too much.
Jun 21, 2013 2:53PM
avatar
Starbucks sucks anyway... the few times I have tried their product have been while I was traveling, and had to choose between Starbucks or no coffee.  It was terrible every time, 3 bucks for a cup of battery acid a long time ago, now I just pass.
Jun 21, 2013 3:03PM
avatar
starbucks is overpriced anyways, if you are shopping there you deserve to get gouged on the high prices.
Jun 21, 2013 3:22PM
avatar
I spent $7.50 on a chocolate smoothie the other day, which was horribly bitter, and probably 16oz at max.  Only reason I even bought it was because I had gotten an $8 credit from a hotel I was staying in.  You have to be an idiot to pay those prices regularly.  I'll stick with my $1.15 wawa or 7-11 20oz cups of coffee.
Jun 21, 2013 3:09PM
avatar
Bad coffee and the "brewistas" act like they are doing you a huge favor pouring a cup for you!    Last time I made the mistake of getting Starbucks it took in excess of 15 minutes to get a cup of coffee which is always strong and bitter.   Now I go to the RaceTrac next door to Starbucks, pour my own, get good coffee and whatever flavor, etc. I want, and all for about $1, in usually under 5 minutes if the checkout line is not too long!     Will never make the mistake of going to Starbucks again!   
Jun 21, 2013 3:35PM
avatar
I stopped buying at Starbucks years ago. I didn't like their corporate policies. Besides, I make a better cup of coffee at home, so why do I need to spend a fortune buying their crap. I miss the local mom and pop shops that these b___s put out of business. I'm for small entrepreneurship in America, not large greedy corporations that want to own the world. 
Jun 21, 2013 3:24PM
avatar
7-11, Dunkin' Donuts, and McDonald's coffees are better and cheaper than Starbucks. Why pay more for the bullsh*t name?
Jun 21, 2013 3:30PM
avatar

I on the other hand have been going to Starbucks for years and I can tell you that a bad cup of coffee there is possible, but rare, and they will make you a fresh cup if you ask.  Also, be sure to factor in a clean bathroom, great music, and free internet, not to mention a heated or cooled place to sit, if that all isn't worth $2.00, what is?

 

 

Jun 21, 2013 2:55PM
avatar
I have never had a Starbucks coffee and I plan to Never have a starbucks coffe.
Jun 21, 2013 3:27PM
avatar
they are overrated and over priced, i never go there.. typical yuppie image! ! ! ! ! !
Jun 21, 2013 3:28PM
avatar
They're a total rip-off.  Make your own "fusion" tea drinks and latte's and you'll save yourself at least a hundred bucks a month.
avatar

Look folks.....

Anyone who buys Starbucks coffee has two issues.

Firstly they are getting ripped off and secondly their coffee is crap.

$4 for a late, really?

Then they always expect a tip! Why? For doing what they are paid for already?

 

Perhaps try an espresso from a small Mom and Pop shop who actually deserve the money.

Jun 21, 2013 3:51PM
avatar
I think they should raise their prices!! At least to 12 dollars a cup for coffee! It won't affect me one bit and it will make the "image" group who drive Jaquars and Caddilacs happy.  I drive an old Dodge truck and I don't go to Starbucks anyway.  I have been there, but never paid for a cup of coffee.  Went there with the "elite" who wanted me to "try" a cup of Starbucks coffee! They paid for it, I drank it, they went home on their Cadillac, I went home on my ragged car, they were happy to "show me" how they had money, I was happy to drink the coffee they paid for. I ain't been back!!!
Jun 21, 2013 3:44PM
avatar
what's new! quality, quantity, down...price up. I would charge more too if people are dumb enough to pay it!
Jun 21, 2013 3:52PM
avatar
I'm very happy that I have never and will not ever spend a dime at a Starbucks.
Jun 21, 2013 3:03PM
avatar

OVERRATED POS STUFF ANYWAY I CAN BUY MY OWN GRINDS AND KICK THEIR A$$ WITH FLAVOR

SO WE WOULD BE PAYING FOR THE "FREE" WIFI NOT BETTER COFFEE EHHH?? BUNCH OF PRETENTIOUS  YUPPIES

Jun 21, 2013 3:50PM
Jun 21, 2013 4:17PM
avatar
Anyone else notice that the large drinks from MC Donalds (that use to be 32 oz) are smaller?
Jun 21, 2013 3:10PM
avatar
the last time I had a starbucks it had no froth and there was oil floating on the top, it was horrible, so I go to Moxie Java, much better
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?

MARKET UPDATE

[BRIEFING.COM] The stock market ended the midweek session on a mixed note. Blue chip listings bolstered the Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.3%), while the Russell 2000 (-0.4%) and Nasdaq Composite (-0.02%) underperformed.

Equity indices began the day in the red, but wasted no time regaining their flat lines. Small-cap stocks were not as fortunate as the Russell 2000 spent the day in the red.

Upon returning into positive territory, the key indices were ... More

MSN MONEY'S