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?