Reversing Course, Starbucks Says It Will Raise Coffee Prices While Starbucks CEO Howard Schultz said in March that Starbucks had no plans to raise prices, the coffee chain is now hiking prices on some drinks.
By Kate Taylor •
Opinions expressed by Entrepreneur contributors are their own.
Updated at 12:40 am E.T.
First was the specialty coffee shops. Then it was Dunkin' Donuts. Now, Starbucks has finally announced plans to raise prices on certain drinks and bags of packaged coffee sold in supermarkets.
Starting this week, Starbucks is raising prices on some drinks by 5 cents to 20 cents. The Seattle-based company will also increase prices of packaged Starbucks coffee sold in supermarkets by $1, while keeping the prices of packaged coffee sold in stores the same.
The mega-chain had so far avoided the price hikes that are sweeping the industry. At the center of the price increase is a Brazilian drought, which has caused coffee bean shortages, along with an increased outbreak of coffee rust (a fungus that destroys coffee leaves). While smaller shops were the first to be affected, earlier this month Dunkin' Donuts announced that its prices would likely soon increase.
Related: Dunkin' Donuts Franchisees Forced to Raise Coffee Prices
This move comes after past statements from the company saying they planned on keeping prices constant. In March, Starbucks CEO Howard Schultz stated that Starbucks had no intentions of raising its prices, a plan confirmed in May by a spokesperson to Entrepreneur.com. Starbucks has so far been able to avoid significant price increases by buying from a varied wealth of suppliers and penning advanced purchasing deals. As Starbucks utilizes a more long-term approach to buying coffee, its decision to raise prices is instead influenced by a number of factors, including "competitive dynamics" and the company's "overall cost structure," according to a Starbucks spokesperson.
The price increase will roll out to Starbucks shops Tuesday and vary depending on the region. In most U.S. markets, prices for Grande and Venti coffee will increase 10 cents and 15 cents, respectively. Other drinks, such as tall brewed coffees, Grande Lattes and Frappuccinos will not be affected by the price hike. Food items will also not be affected by the price increases.
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