Starbucks Raises Prices on Some Drinks -- Update
July 12 2016 - 3:20PM
Dow Jones News
By Joshua Jamerson
Starbucks Corp. said Tuesday that customers at many of its U.S.
stores will pay as much as 30 cents more for certain beverages as
prices for raw coffee have climbed amid rising operating
expenses.
Starbucks customers will pay 10 cents to 20 cents more for
certain sizes of brewed coffee, and 10 cents to 30 cents more on
espresso beverages and tea lattes. The increases, effective at
company-operated stores in the U.S., will vary by market.
In the past two years, Starbucks has raised prices on certain
beverages by between 5 cents and 20 cents each year. The company on
Tuesday said the latest increase was needed for "business
needs."
A Starbucks spokeswoman said the price increases are the result
of rising expenses, such as increase compensation rent,
distribution, marketing, labor and commodities--including coffee
and others.
The move comes a day after Starbucks said it would increase
compensation by up to 15% for employees in company-operated stores,
joining the ranks of many firms lately that have chosen to raise
workers' wages.
In April, the Seattle company reported profit rose 16% as the
coffee chain attracted more mobile users in the U.S. But sales
didn't climb as high as Wall Street was expecting. The company is
expected to next report quarterly results next week.
Meanwhile, raw coffee is becoming more expensive. Arabica coffee
futures have risen 11.5% year-to-date and recently traded at $1.478
a pound on the ICE Futures U.S. exchange.
Starbucks said Tuesday that the price increase had been
prematurely entered into point of sale systems in its
company-operated stores, but it didn't say how many customers were
affected or when the higher prices were prematurely entered.
Starbucks stock rose 1.9% to $57.39 in afternoon trading. Shares
have fallen 3.6% in the past three months but are still up about 5%
from a year ago.
--Julie Wernau contributed to this article.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
July 12, 2016 15:05 ET (19:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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