NEW BRUNSWICK, NJ–On July 7, Starbucks coffee shops raised prices on some beverages amid the rising cost of wages and rent, according to the Wall Street Journal.
Asked if the Hub City Starbucks at 351 George Street would increase any of its prices, a Starbucks spokesperson stated: “The price adjustment applies to all company-operated stores across the country, including those in NJ.”
The George Street location is company-operated, yet management declined to comment on the new pricing.
But the corporate spokesperson noted that adjustments and overall prices will continue to vary on a market-by-market basis.
Some stores will charge customers up to 20 cents more for certain beverages but the types of drinks affected will vary by store location.
“For most beverages that are increasing, prices will go up 5-20 cents,” the spokseperson told New Brunswick Today.
Most stores will increase the prices on tall, or 12-ounce, and venti, or 20-ounce, brewed coffee, as well as grande, or 16-ounce, latte, according to the Journal, which says that the increase represents the first price increase on these products in two years.
Fortunately, the more popular items and sizes will not increase in price.
But the slightly higher check-out price on certain drinks come “as prices for raw coffee have been falling,” says the report.
While Starbucks usually raises its prices to compensate for increasing coffee bean prices, the July price hikes come “despite a decline of about 42% in Arabica futures prices from a peak late last year.”
While packaged coffee sold in grocery stores reportedly went up $1, to $9.99 per bag this month, Starbucks says its packaged coffee and food items sold in its own stores will not go up in price right now.
A spokeswoman for the company cited “an overall need to manage business costs, including labor and rent expenses,” according to the Journal.
“We continually evaluate pricing on a product-by-product and market-by-market basis in our stores in order to balance the need to run our business profitably while continuing to provide value to our loyal customers and to attract new customers,” the Starbucks spokesperson told NBT.
Starbucks says “Fewer than 20 percent of our customers will be impacted.”
“In most stores the price of a Grande Brewed Coffee, Frappuccino and Refreshment beverages will not change,” Starbucks told NBT, seeming to repeatedly emphasize the positives.
A Yahoo! Finance article argues that Starbucks isn’t raising prices because they have to – but rather because it can get more from that segment, 1/5th, who purchase the larger serving size.
“Companies charge what the market will bear and Starbucks is betting its most loyal coffee junkies, specifically those ordering Venti-sized vats of liquid speed, are willing to pay more,” reads the Yahoo! article, adding: “When you can’t find cheap coffee anywhere it’ll be inflation. For now think of this as a luxury tax.”
A similar finding is mentioned in a Forbes.com report: “Starbucks feels that the price hike will be barely noticeable considering the coffee enthusiasts can already afford the lofty prices and the increased prices won’t have much of a dent on customer visits.”
WSJ reader comments ran the gamut:
“Is the dollar menu at McDonald’s doomed?” asked one reader.
“Everytime you drink this garbage you are making that CEO, Howard, a richer person. Best to avoid and support your local shops,” commented another reader, who got agreement from a reader who said: “They’ve made their overpriced brown-water, even more overpriced. Haven’t shopped there in years anyway.”
“Everyone is now making more money, and prices of everything is on the rise,” wrote another commenter. ” But wait, now those minimum wage Starbucks employees realize that everything costs more so their new salaries just won’t cut it, so they need a raise too. Rinse and repeat,” said another reader’s comment.
Another reader mentioned using robots to replace human workers: “The solution is, of course, is to use robots to make coffee, that way Starbuck’s can keep prices low, but of course now these minimum wage workers don’t have any job.”
Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.