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Starbucks announces price hike

Jennifer Metz | Tuesday, September 26, 2006

Starbucks announced Thursday that coffee-drinkers nationwide will have to fork over an extra nickel for drinks bought at any of their 8,614 locations, including the LaFortune Student Center shop.

In the first price change since 2004, all drinks will cost an extra five cents and all pound bags of whole bean coffee will go up by fifty cents, David Prentkowski, Director of Food Services, said.

The increase – which Prentkowski said was “not unusual” – was necessary to cover increasing labor, product and fuel costs associated with the procurement of coffee beans.

As a licensed store, the LaFortune branch will follow the practices recommended by the company, Prentkowski said.

Analysts say that the price change – which is set to take place sometime this week – comes at a good time for the company because “the average price of gasoline has declined 16 percent” in the last month alone, according to Reuters. Though there are many economic pressures facing consumers, a decrease in gas prices always alleviates some of the pressure from consumer wallets.

In July, Starbucks posted its weakest monthly same-store sales increase since 2001, which it blames on the high demand for Frappuccino drinks that take a longer time to prepare, according to a Sept. 22 Reuters article. Customers are becoming unwilling to wait on long lines for these drinks, taking a toll on overall sales.

Notre Dame freshman Courtney Ball said she isn’t happy with the price increase on her tall vanilla latte, which already costs $3.00.

“It seems like [Starbucks] makes a significant profit … I don’t see why they need to raise their prices … it’s already ‘designer coffee,'” she said.

While students may not be pleased with the price hike, those on Wall Street were pleasantly surprised, telling Reuters that the move “is sure to boost sales and earnings, but unlikely to spook customers who see a trip to the chain as an affordable luxury.”

The company’s management has also said that Starbucks stores are unlikely to be effected if the economy takes a turn for the worse.

“I don’t see anything that indicates in the near future that Starbucks is going to be susceptible to the economy,” chairman Howard Schultz told Reuters on Monday.