If you're a loyal Starbucks customer, it might be time to adjust your coffee budget. During the company's recent third quarter 2021 earnings call, Starbucks noted that it may be increasing its menu prices to offset inflation and rising costs. The coffee chain will be able to do this via its promotional (short-term) offerings and drink premiumization (aka making products more luxurious and high-quality).
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A quick explainer: According to a transcript of the call, Starbucks' analytics have found that the company has pricing power, a business term that refers to the relationship between price adjustments and product demand. "Pricing power" is defined as "a company's ability to raise prices without reducing demand in their products," according to ProfitWell.
Specifically, Starbucks' pricing power lies within promotional and premium products, which includes their cold beverage offerings (think: Starbucks Cold Brew, Nitro Cold Brew, and Refreshers). They'll also continue to emphasize personalization — like adding cold foam or non-dairy milk — along with their popular cold beverages.
All that said, it's possible that Starbucks may raise its prices to offset inflation-related hurdles. We're curious to see if these price hikes will only affect the fan-favorite products mentioned above or their menu as a whole. We also can't help but wonder if the brand will create even more opportunities for personalization, as it seems to be a hit with their customers. Only time will tell!
How much will Starbucks prices increase?
When Starbucks decides to increase its prices, the price hike will depend on your specific region. For example, in 2016, Starbucks published an announcement stating that it will increase prices on espresso drinks and tea lattes by 10 to 30 cents, depending on the area. Obviously, Starbucks has increased their prices several times since then, but hopefully the brand gives folks a heads-up before making another round of price hikes.