Are you one of the millions of people that love Starbucks coffee? If so, you may be in for a big surprise. Starbucks has recently announced that it will be raising the prices for select beverages anywhere from five to 20 cents, an increase of approximately 1%. This is the second time they’ve raised their prices on a national level in about a year.
This increase won’t affect bagged coffee, however, the costs of both the small and large brewed coffees will go up by 10 cents in most places around the country. This would bring the price of a large coffee to $2.45 in the majority of Starbucks’ U.S. stores. This is the first price increase for these particular items in about two years.
Thankfully, most customers won’t notice the change because the prices for their most popular beverages, like cold drinks and Frappuccinos, will remain the same. It is also important to note that the price increase for specific drinks will vary by market. In fact, Starbucks estimates that less than 20 percent of their customers will be affected.
Like other coffee sellers, Starbucks raises it prices when coffee prices increase. However, there has been a steep decline of 42% in the cost of Arabica coffee bean futures. This decline is actually causing other major coffee sellers, like the JM Smucker Co., to cut the prices of their coffee products.
Starbucks maintains that their price increase has nothing to due with the cost of unroasted Arabica beans. Instead, they are basing this change on the price increase in labor, rent, equipment, and marketing.
Restaurant chains, such as Chipotle Mexican Grill Inc., are following Starbucks’ lead and raising their prices in order to offset the high labor costs they are facing. For example, the popular Mexican restaurant increased its prices by an average of over 10 percent in San Francisco; this is due to the recent rise of the city’s minimum wage from $10.74 to $12.25 an hour, based on a report from William Blair & Co.