The warning came in April 2009, a Starbucks representative tells me: during the analyst call to review the second fiscal quarter results for 2009. CEO Howard Schultz issued the bland-seeming statement, saying price "fine-tuning" would occur, "minor changes that will lower prices on some of our popular items such as tall lattes and slightly increased prices on our larger and more complex beverages." But last week, a series of new price increases were unrolled, hitting customers who ask for extra espresso shots, additional flavored syrups, or soy milk substitutes hard.
In New York and Canada, all the specialty drinks became more expensive, including (yup) the tall latte, by 5-10%. Regular drip coffee did adjust downward by about 10 cents in most markets; tea went up everywhere, significantly, but this was in connection with the roll out of new, more premium looseleaf tea sachets.
Suffering the biggest impact across North America are those Starbucks customers who routinely pump up their favorite caffeinated beverage with extra shots, now 65 cents here in Portland, Ore. and as much as 70 cents elsewhere; extra syrups, 45 cents here and 40 cents in other markets; and dairy avoiders will now pay 50 cents in Portland to substitute soy for milk in a beverage. All these changes together could send the prices of popular drinks such as a grande soy vanilla latte, add a shot, up to $4.75 here and over $6 in more expensive markets.
Customers hadn't yet begun to complain loudly about the increases to extras as of last week; most of them hadn't yet noticed the change. Those who did were incensed, "boo"ing and sadly heralding the end of extra shots. Once the news hit the wires describing the price hikes as ones on "complex orders," reaction became more clamorous. "Screw that. Longtime fan, no more," said one customer. "This insults my intelligence," said another, wondering how pumping syrup could possibly be described as complicated.
Adding to the annoyance of many customers was the recent change in the assortment of rewards cards, eliminating the "black gold" reward card that had allowed holders to receive a 10% discount on their orders. In its place is a new system requiring five purchases on a registered card in order to trigger "green level" rewards, allowing free flavored syrups and soy milks. (All cardholders already registered at Starbucks.com are "automatically enrolled" at the green level, although purchases before December 26, 2009 don't count toward the "gold level," where every 15 transactions earns you a free drink.)
The system, which requires customers to prepay for their purchases, is often considered a terrible deal for consumers and a sweetheart bargain for companies -- Starbucks gets an interest-free loan of customers' money.
Other than that slim price break on regular coffee, the only relief customers can get is a coupon insert in many newspapers Sunday, January 17, offering $1 off "all day, every day" on two items: the "perfect oatmeal" and the new hot paninis. While this is surely an unusual offer -- it's good through March 8, yielding nearly two months of daily freebies -- if customers love the oatmeal that much, they'd save way more by purchasing it in bulk (it'll taste better, too).
My husband's Army buddy, Sgt. Sprauer, prefers her lattes enormous and extremely sweet. She was already paying over $6 for her preferred brew; for her and others like her, already accustomed to paying up for a predilection for sweet, extremely caffeinated concoctions, perhaps it won't be much noticed.
Perhaps this is even part of Starbucks' effort to slim down its customers, who are being offered pastries and sandwiches with fewer calories. Admirable, 'bucks. But for many customers it will probably be the inspiration they needed to cut back, either on fancy drinks (we'll just make that a plain latte, thanks...) or on Starbucks altogether.
Just think what you can do with all the money you'll save.
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