Tuesday, July 7, 2015

Starbucks raises prices after hiking miminum wage

Coffee prices are going down and many coffee shops are cutting their prices.  However, Starbucks is instead raising its prices as it also gave a minimum wage increase earlier this year. The Wall Street Journal reported:

Starbucks is raising prices slightly on some of its beverages to cover rising costs including wages and rent, even as prices for raw coffee have been falling.

The Seattle company, like other coffee purveyors, often raises prices for its products when coffee prices increase, but the latest move comes despite a decline of about 42% in Arabica futures prices from a peak late last year. The increase, which takes effect Tuesday, will increase the cost of the average customer order by about 1%, Starbucks said. Bagged coffee won’t be affected.

The increase comes from an overall need to manage business costs, including labor and rent expenses, a Starbucks spokeswoman said.

“Our pricing philosophy is to balance our need to run our business effectively while providing maximum value to our customers,” she said.

Some other retailers have started raising prices in cities that have passed wage increases. Chipotle Mexican Grill Inc. has been raising prices in several cities across the country, with the highest increases in San Francisco, where the minimum hourly wage rose to $12.25 on May 1, up from $10.74. Chipotle’s menu prices in San Francisco rose, on average, more than 10% compared with about 4% in other cities, according to a recent note from William Blair & Co.

Cups & Stinky Beans, anyone? 


Anonymous said...

Gee. Raising prices to offset expenses. Who ever heard of such a thing?

noel said...

hahaha, math

Anonymous said...

ouch - math hurts my brain!

just tax the rich to pay for my latte

Anonymous said...

Good! Now maybe all of the libtards that go to Starbucks will understand why raising the minimum wage to $15 an hour isn't a good idea?

Anonymous said...

12:39. All the "libtards" I know go to sneaky beans, cups, or whole foods. And in Seattle- far better places than Starbucks anyway. Libtards there support local too- with the exception of whole foods, trader joes, and urban outfitters

Tell Da Troof, Danny Mollisack! said...

Econ 101. A totally foreign subject to people who think wage hikes occur in a vacuum.

I always smile when reality manifests itself squarely in the liberal fantasyland of highly paid unskilled workers funded by confiscatory taxes levied against "the rich" and "corporations".

How many patchouli oil types who screamed loudly and publicly to raise the MW are now grumbling that their venti soy latte costs a buck more? Pretty much all of them.

Anonymous said...

Raising the minimum wage is still a good idea. First quarter profits for Starbucks were up 80% and that brought profits per share up to 80 cents. They also increased the CEO's compensation package by nearly 30% in 2014.

Starbucks hasn't increased their minimum pay scale to $15, so we aren't talking about the proposed living wage increase. They have had a minimal increase in labor costs, and my guess is that Starbucks has analyzed its market data and found that their customer can absorb higher costs. This means they can continue their ever increasing profit per share target while also paying a higher wage.

The issue is that we aren't talking about a company in the red. Starbucks has a very healthy profit margin and despite paying millions to their executives, they claim they can't sacrifice a few cents per share to give their employees a fair wage. This is where the major disconnect should be for Americans. It's one thing to argue that the small business owner may go out of business because of increased labor costs (bad), but protecting a massive corporation's already healthy profit margin at the expense of fair pay and employee benefits?

We subsidize these Starbucks employees with our tax dollars because there are 191,000 Starbucks employees out there that will qualify for government benefits. If you want to be a true conservative, push for high minimum wages and slash government benefits.

Anonymous said...

If you can afford to buy coffee at Starbucks in the first place, you can afford to pay enough to furnish the people who are helping you with a decent wage.

Anonymous said...

I like the old fashioned black and strong coffee, don't care what they charge, never set foot in any of their joints.

Anonymous said...

Basic Retail 101

1 before 2 and 3 before 4 otherwise known as "good news first" and "bad news last" or no good deed goes unpunished.

Anonymous said...

I stopped at a Starbucks last week for the first time in years. The prices were already too high so I will not be going back. I have noticed, in my town anyway, many people who complain about never having any money, they don't pay their debts but somehow have money to buy coffee at Starbucks while talking on their iPhone 6.

Wacko Logic Spotted said...

So,4:04, just to be sure I understand your logic: Support an increase in the minimum wage so costs and prices will escalate and I will pay more so the government won't continue to give people an 'earned income tax credit'? Were you serious or just strung-out?

Anonymous said...

@Wacko Logic Spotted

If you're making $15k a year you qualify for a lot more than an EITC. You get the full ACA subsidy, food stamps, and all the other social safety nets.

Also, the point was that prices shouldn't increase due to marginal increases in labor costs. Corporate profits are a scam when labor costs have been stagnate for a decade.

Col. Reb Sez said...

Starbucks coffee tastes bad. They roast the beans to the second "pop," and as a result their coffee has a burnt taste. If it were free I wouldn't drink it, although it is okay when mixed with a bunch of milk and sugar to make a latte.

Anonymous said...

I believe that the minimum wage has outlived it's usefulness. Once upon a time it was difficult for workers to change jobs or even to find out how much they might make elsewhere. The internet has changed that. You can apply for jobs, email back and forth about wages, etc. and in many cases miss only an hour or so to interview for your new job. The fact the every employee (who does not have a contract) can quit or be fired tomorrow is the trump card that keeps everything fair. Don't like what you are paid? Go to work elsewhere. As a business owner you would soon learn that if good workers are not rewarded they will leave. Meanwhile as minimum wages have risen so has teenage unemployment, teenage crime, and unwed motherhood. For most people a minimum wage job is a first job, a stepping stone where they can learn how to work and improve their skills and resume. When employers are forced to pay too much for unskilled work the young people who need the job the most will not be hired. I am baffled at why we are even discussing minimum wage anymore.

Gimme Moe said...

9:37; You seem to be suggesting that Starbucks employees are making minimum wage at present. I doubt that. But, who cares? Let the free market take care of wages and whether or not the business thrives. If every soul currently getting an EITC check were to lose that benefit due to an increase in their income, the government would almost immediately dream up another entitlement for them and they'd never miss a beat.

A job at Starbucks, like a job at McDonald's or Church's Chicken should not be a goal or a means of supporting a herd up chillun.

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