Here in Australia, you can get a really high-quality coffee from just about any petrol station for $1 (in AUD; around 70c in USD). Yet in spite of this, we have a thriving cafe scene where people will gladly pay $4-$5 for a take-away latte.
What's equally "irrational" is that Starbucks, despite the high amount of effort put into each drink, is generally considered to be worse than the $1 coffee from 7-11 or Coles Express.
I'm not 100% sure what the takeaway point is, but it was just so jarring to read that Americans view Starbucks as a luxury rather than some kind of bizarro-world meme.