Welcome to the newest edition of The Why. “Why is Starbucks raising prices?” Good question. (Honestly, it’s a silly question considering the money their customers have to throw away but it does help to put off more questions about the raise in rates of hookers who work across the street from Starbucks, at any rate. Seriously? If you had to do some of those things with old, fat men who have questionable hygiene you’d be charging twice as much as Starbucks, mmmkay?)
So Starbucks is raising prices again? Yes on some things. The Seattle-based coffee chain did just announce they are preparing to raise their prices. The Associated Press confirms this.
However, it’s not an “across the board” increase. Our guest speaker, Robert Hackett of Fortune and Time fame, elucidates: “The cost of most affected drinks will rise somewhere between a nickel and 20 cents, the company says.” The new price of the specific drinks will go up about one percent.
Hackett notes: “For most people, this means the price of a brewed coffee will jump 10 cents, bumping the cost of a large coffee in most U.S. shops to $2.45, according to AP, although that figure varies regionally.”
Got it. Now but why is Starbucks raising prices?
It’s not coffee prices. That was last year. Hackett agrees that this “has nothing to do with the cost of coffee. He reports that Arabica futures . . . have declined to 42 percent since last year’s high.”
Both the AP and Hackett note that Starbucks is raising prices this year to offset employee pay raises “and rising rent.” He states that the “claim holds some water.”
Hackett concludes: “On a recent episode of Fortune Live, Zillow CEO Spencer Rascoff told host Leigh Gallagher that the presence of a Starbucks within a quarter mile of a residence increased its property cost by about 96 percent on average between 1997 and 2014.” Indeed, Starbucks has become “a victim of its own halo effect.”
Why is Starbucks raising prices? Now you know.
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