Starbucks is raising prices almost every month now

Because they keep raising prices and people keep paying and their YoYs keep going up. So they'll keep doing it. It, unfortunately, works.

I guess it's because an inflationary environment is the best time to increase profit margins, because the average customer won't be able to tell the real increase when everything else gets more expensive as well. It is relatively harder to justify price changes when inflation is near zero.

Raising prices while everyone is might avoid any negative press. Plus you get to test how inelastic your demand / how price sensitive your consumers really are. Since most people buy coffee out of a habit to get their daily caffeine (and sugar) dosage I would reckon demand is pretty inelastic and management wanted to test that. You can always suddenly lower prices again for consumables like coffee - doesn't hurt your image long term. It's not like a luxury brand starting to lower their prices - which would be detrimental for their brand.

I’m actually going to McD more than I have in the past. With mcd app, it’s really cheap when I’m on the move. Like $5 for a meal cheap.

Anecdotally, my family has significantly cut back on going out. We used to have a weekly habit of going out to eat with a family of four. We rarely go out now, and usually just as a couple. It's just too expensive.

In the long term, it might be a good thing. Part of the obesity epidemic in the US could be attributed to the fact of how cheap it was to get a meal at a fast food joint compared to just eating in. That differential has significantly increased, probably by at least a factor of 2x in the past few years.

Of course they always say places like McDonald's are really a real estate business disguised as a fast food joint. We'll see how well that holds up in this age of crumbling CRE values.

The problem is there is no punishment for the people who do it. The board and higher ups get their short term profits that wall street love and when they eventually see that people stop coming the CEO will get a multi-million exit package and go and destroy his/her next business. In fact, they get rewarded for it.

Gross Profit doesn't matter - it's Net that matters. There's more to a business like Starbucks than just COGS.

Their Net[1] doesn't paint as rosy of a picture as you described. While still a growing organization, the annual YoY growth isn't outrageous.

A smart business will also plan for upcoming expenses - like wage growth, downturn in markets (to sustain hard times), volatile goods cost, ever increasing rent/CRE, upcoming legislation, and more. That's along with all your normal business planning, such as expansion, new marketing endeavors, etc.

This theme... of trying to angle increased prices as pure corporate greed is very misguided.

[1] https://www.macrotrends.net/stocks/charts/SBUX/starbucks/net...

If I remember rightly, Starbucks' profits two years ago were down fairly substantially compared to their pre-pandemic levels and their long term goal seems to be to try and return the business to that same stable level of profit.

Habits have momentum, and people aren't paying close attention to prices. They may not actually realize that the cost of fast food (FF) is now the cost of a sit down meal (SDM) at a full-service restaurant. So for a while FF feels cheaper than SDM even when it isn't, and FF chains can reap considerable benefits. They may retain the feeling of being affordable for many years after becoming not so. The same thing has happened with supermarket food prices: the cost of a steak at the supermarket now rivals the cost of an SDM, and all the trimmings and service. The price of an ordinary loaf of bread at places like Whole Foods is $8. But Trader Joe's prices and Costco prices have remained more-or-less constant.

As long as people keep buying they will keep doing this. There is no incentive for them not to.

I've been starting to get suspicious that we might see some real movement because of this. People will start being able to compete at these prices.

What can a local coffee shop give you for $8-20. Probably a better cup of coffee, or a full meal with coffee on the higher end. Better quality food made to order.

You should really use a basket of goods, there are a lot of reasons why a single commodity may change in price. This is kind of why we have CPI and PCE.

Here's real-dollar food PCE. It's up about 38% since 2007 or just over 2% annualized increase above inflation.

[1] https://fred.stlouisfed.org/series/DFXARX1M020SBEA

The variation on the prices of ingredients has to be almost negligible for those drinks.

Even in a huge cup you have at most $0.40 worth of milk and $0.30 of coffee beans (and that's generous, you could get specialty beans at that price).

the linked reddit specifies soy milk

Considering most fast food places are comparable in price to local restaurants with table service, I’m not surprised. A pretty disproportionate amount of value is being extracted rather than added by these franchises.

> That was the last straw.

Oh now you want a straw?

Not saying Starbucks is the best in the world, but airport and co-located stores (e.g. inside a Target, grocery store, or hotel) are absolutely the worst versions of Starbucks. They’re more like a cut down version that sometimes uses instant coffee, has a limited menu, or are just constrained by the difficulty of operating in an airport.

Don’t base your opinion of them based on what you’re getting in an airport.

P.S. Most airport versions of a restaurant are typically the worst versions.

Yeah Starbucks would be at least 10% if that. At $5 a day, 5 days a week, you get ~260 days * $5 = ~$1300.

And if your chosen drink from Starbucks is more expensive, and you order more than once a day, then double or even triple that figure.

From time to time, I'm just too damn lazy to get up and cook, so app delivery it is. Or I have food, but forget to thaw something, so it won't be ready to cook in time, so app delivery it is.

I know there's a "you so lazy" tax. I've heard that on top of tips, delivery fees, app fees, they even modify the prices. Today, I went to one of the places I like to order from in person (such a rare thing for me to do). While there, I used app delivery to view their prices to the actual menu in front of me. Every single plate was at least $3 more expensive on the app. I deleted the app then and there.

That's... the idea of restaurants, right? You can get all the ingredients in bulk yourself and save on the labour costs by making it yourself.

The Fed said they were only looking at core inflation, which excludes housing, energy, and food. Companies immediately started soaking consumers for those.

Both _can_ be true. They may be price gouging.

I see this so much these days. I totally get being upset about rents, utilities, and supermarket food. But Starbucks and such are entirely unnecessary, there are no ethics or shame involved here. If it’s not worth the price, don’t buy it. You don’t have to buy it.

> Starbucks will raise their price until the point that people no longer think it's worth it.

You not it's not too expensive when people are still buying it. If it were truly too expensive, nobody would buy it. I can't remember where I first heard that, but I do remember having a hyperbole comment after that that was followed with, "just because you can't afford it doesn't make it too expensive. it just means you can't, not that others can't". sometimes, you just want to throttle pedants

It's probably better for society for people to frequent third-places more. More sociability, connections - the human touch. It's of course just selling overpriced sugar drinks, but there's also this aspect.

This only works if everyone does it.

Obviously most people don't seem to care for those price hikes at Starbucks. You can make sure they studied the profit/loss on that move.

Just for fun, here are my numbers rounding things up for fun with current prices... Milk 5$ for 2 litres, decent coffee usually around 20$ for 350 grams, water filters 100$ a year, machine 5k good for at least 20000 shots (based on my last one that lasted more than a decade).

The price of my cappuccino comes to around 2$ cad.

This is of course based on low volume and little over head. Of course if I would add utilities and space it would be higher such a businesses do - but it's a decent reference based on more than 20 years of doing it.

Cold foam inflation rate is out of control!

Why what? Nothing in this world is free.

$1.45 - cold foam << That foam isn't going to make itself, so you have to charge to pay the employee making it. The equipment that makes it doesn't run on wishes, so you gotta charge for the electricity to run the equipment. The equipment doesn't clean itself, so you have to help pay for the cleaning fee since it was dirtied at your request.

$0.80 - syrup << Just like anything thing like beer/shots/etc. Things cost money when you buy in a retail with mark up. It's not rocket science. Ever paid for a shot? Of course you can buy a bottle for the same price as a round of shots for you and your mates.

As a side note, in all of those movies where someone is at the bar and then tells the bartender to "leave the bottle". Like, is that something you can actually do, and if so, what's the tab on that going to run? Of course, you're not supposed to think about the movie like that. I just can't help it.

At least here in Canada: Starbucks has obvious, measurably worse coffee than most other chains.

Just order a black espresso to see. Starbucks is banking on the fact that most people order drinks, and the quality of the coffee is indiscernible among the milk and sugars.

At this point, Starbucks has worse coffee than McDonald's and is only a step above Tim Hortons (which itself is on par with truck stop coffee).

> Starbucks is the only chain where I've never been served a bad or stale cup of coffee.

To each their own I suppose. They are rather consistent, I'll give them that.

Hasn't been my experience, also the damn cups are almost guaranteed to get coffee on someone.. the place is over priced garbo