Tuesday, January 3, 2012
Starbucks goes all capitalistic
Posted by Cliff Bostock @cliffbostock on Tue, Jan 3, 2012 at 9:42 PM
- ambroselerma.wordpress.com
Average increase is 1 percent but, according to an incredibly confusing and inconsistent avalanche of reporting, the price of a tall cup of brewed coffee will be 10 cents more in some regions, including the Sunbelt.
Starbucks expects high costs for things like coffee, milk and fuel to cut into profits this year. Like other restaurant operators ranging from Chipotle Mexican Grill (CMG.N) to McDonald's Corp (MCD.N), it is raising prices to help offset some of that cost pressure."They're trying to protect their profits and margins. Everyone else is doing it, so why not they?" said Edward Jones analyst Jack Russo.
Starbucks "can do this and get away with it given their presence in the coffee industry and the positive brand equity that the Starbucks name brings," Russo said.
I cannot abide Starbucks' brewed coffee, but I find the espresso tolerable and I didn't notice any increase in my macchiato's price today. However, I did find the counter stacked with leaflets advertising the company's Create Jobs for USA initiative. More jobs=more customers. Yay!
A reminder: If you order your coffee in a mug, you get a 10-cent discount, unless that's changed too.
Comments (1)
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10 cents, or 1%, seems like a pretty easy cost to pass along. There are two types of Starbucks drinks - (i) Treaters: people who treat themselves to a cup of coffee, frappa-whatever, etc. occasionally, and (ii) Daily Drinkers - which I'm a part of. Anyone who views Starbucks as a "treat" isn't going to cut that out because of a 1%/10 cent increase, and people who drink daily aren't going to cut that off, or switch to inferior coffee, because of such a marginal increase.
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