Your Starbucks coffee run could soon cost more. Here’s why prices are going up
Your Starbucks run is about to get more expensive as the coffee chain plans yet another round of price hikes to offset soaring inflation and labor costs brought on by the COVID-19 pandemic, multiple news outlets report.
Coffee lovers could soon see higher prices despite strong holiday sales for the Washington-based company, which saw net revenues rise 19% to $8.1 billion in its first fiscal quarter, according to an earnings report released Tuesday, Feb. 1.
“Although demand was strong, this pandemic has not been linear, and the macro environment remains dynamic as we experienced higher-than-expected inflationary pressures, increased costs due to Omicron (variant) and a tight labor market,” Starbucks President and CEO Kevin Johnson said in a statement.
Johnson, who reportedly received a nearly 40% pay raise in 2021, announced the company will pass those costs on to customers by raising prices — again. It marks the second time this year that Starbucks has increased U.S. menu prices after also hiking prices in January 2022.
Menu pricing was also adjusted in October 2021.
“We’ve already taken pricing actions this fiscal year ... ,” he said during an earnings call with investors. “And we have additional pricing actions planned through the balance of this year, which play an important role to mitigate cost pressures including inflation, as we position our business for the future.”
It’s unclear when customers will see the new pricing or if any specific items — including fan-favorites such as the caffè mocha and Irish cream cold brew — will be impacted.
So far, customers have been willing to pay more for their daily cup of Joe. Starbucks COO John Culver said the recent price increases haven’t made “any meaningful impact to customer demand,” The New York Times reported.
Like most industries, Starbucks has been jolted by supply chain snarls and other issues related to the pandemic. Johnson cited three factors for the chain’s latest pricing actions: rising U.S. inflation, COVID-19-related employee pay and staffing shortages — all of which have been ”amplified” in recent months due to spread of the highly infectious omicron variant.
In October, the company announced that it would raise worker wages to at least $15 an hour in 2022 and increase investment in worker benefits to address the ongoing labor shortage.
“We remain focused on actions that drive both top and bottom line growth, including industry-leading investments to attract, train and retain the best talent for our stores as customer occasions increase,” Johnson said in the statement.
Starbucks execs say customer demand is still going strong, so the company plans to cut spending in discretionary areas such as marketing and promotions to balance the rising costs.
This story was originally published February 3, 2022 at 11:34 AM with the headline "Your Starbucks coffee run could soon cost more. Here’s why prices are going up."