Tech & Biz

Starbucks Price Increase: How Much is a Cup of Coffee?

by NowPublic Staff | January 3, 2012 at 12:53 pm

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Starbucks Raises Prices in Several Markets

Starbucks is raising the price of some of its coffee drinks. Starbucks' prices went up an average of 1% in its Northeast and Sunbelt markets. Major cities affected include:

New York City
Boston
Washington, D.C.
Albuquerque
Dallas

New Yorkers, you'll notice that 12-ounce (tall) cups of coffee are around 10 cents more, as are all latte drinks. 16-ounce (grande) cups of coffee will keep their 2011 pricing for now.

Ten cents doesn't sound like much, but Starbucks must be careful not to chase customers away from its highest-margin product: drip coffee. After all, Starbucks may be on what seems like every corner in America, but, in New York, coffee options abound, almost all of which are cheaper than Starbucks.

Expect this to become a trend among chain restaurants: the costs of doing business are rising, so those costs get passed down to you, the customer.

Assuming sales don't dip in the Northeast and Sunbelt markets, expect those price hikes to go nationwide.

This comes after a rash of other increases. Some drinks in California and South Florida became pricier in November, so those regions are excluded from the most recent increase. That's after Starbucks raised prices in 2010, then again in early 2011.

Like any chain, the most salient feature of the Starbucks product is consistency: a cup of Starbucks coffee tastes the same, no matter where you go. This term is not interchangeable with "good", however.

That said, Starbucks has proven that people will pay a premium for predictability.