Your Starbucks Fix Is About to Cost More By Jeff Reeves, Editor of InvestorPlace.com

If your New Year's resolution was to pinch a few more pennies, Starbucks (SBUX) has some bad news for you. The coffee king is raising prices thanks to rising costs of coffee and milk, passing its expenses on to java junkies.

More disturbing, however, isn't the price hike at Starbucks - but the unfortunate reality that nearly all of your favorite restaurants will be charging you more in 2012 than they did last year.

Here are the specifics on Starbucks: The company is raising prices about 1%, on average, in some of its most popular markets in the Northeast and Southwest. Cities such as New York, Dallas, Atlanta and others are the big targets. As one example, a 12-ounce cup of coffee will go up in cost by 10 cents, a Starbucks spokesman said.

This price hike at Starbucks comes after a rash of other increases. Some drinks in California and South Florida became pricier in November, so those regions were excluded from this recent increase. That's after Starbucks raised prices in 2010, then again in early 2011.

We all are paying more these days for essentials like milk and transportation and electricity, so the motivation isn't exactly a mystery. The U.S. inflation rate is tracking a roughly 3.4% annual rate based on recent data.

But that doesn't make the coffee price change any easier to swallow - especially considering Starbucks has seen its year-over-year revenues increase for eight consecutive quarters, and has seen 10 straight quarters of profit increases. It's not exactly like SBUX is going bankrupt because of coffee costs.

What's more, other restaurants have been passing on their cost burden to consumers in an effort to prop up their bottom line. McDonald's (MCD) is in many ways a top competitor of Starbucks with its McCafe line, and McDonald's raised menu prices on a host of items in 2011. Burrito broker Chipotle (CMG) is in the same boat, in June announcing a price hike as food costs jumped from 32% to 35% of its overall business expenditures.

If you think you can stop eating out to avoid this trend, think again. Inflation is eating away at family food budgets, from items like peanut butter and ground beef to soy and Coca-Cola (KO) soft drinks. Heck, even Thanksgiving was a price shock - with the cost of a traditional turkey dinner up 13%, or $6 per household.

So if your New Year's resolution was to save a few more bucks this year by cutting costs, the reality is you probably will have to pair that with another goal: going on a diet.

Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.


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Mike

I get coffee at MC D's better and cheaper, you CAN HAVE THE FRENCHY FRU FRU CANDY COFFEE, what the he ll happended to the real men? Got gold?

January 08 2012 at 1:17 PM Report abuse rate up rate down Reply
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January 07 2012 at 12:52 PM Report abuse rate up rate down Reply
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January 06 2012 at 2:31 AM Report abuse +3 rate up rate down Reply
Dating

If you find a man ro woman on wealthychats.com site, you can eat these everyday!

January 06 2012 at 1:23 AM Report abuse rate up rate down Reply
Jack Foley

Strarbucks is definitely a habit that a debt ridden person whould pass on especially now with the price hike..

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January 05 2012 at 5:27 AM Report abuse rate up rate down Reply
Jack Foley

Strarbucks is definitely a habit that a debt ridden person whould pass on especially now with the price hike..

January 05 2012 at 5:27 AM Report abuse rate up rate down Reply
Jeff

I only go there because I get gift cards from my inlaws at Christmas. I keep telling them to stop, but keep getting the cards. Otherwise you would never see me in a Starbucks, and I can afford to go.

January 04 2012 at 11:42 AM Report abuse rate up rate down Reply
Jeff

I sure everyone has notice how EVERYTHING is going up in price, at the woarse time. Oh, not generally your pay though.
I wish they would just raise all prices by 30% ++ and be done with it. Quite screwing around! Then we will see what is coming anyway.

January 04 2012 at 11:32 AM Report abuse rate up rate down Reply
l07hye

I know how to brew coffee myself., don't need to buy Starbucks. If I need coffee later when I am not going to be home, I take out my thermos, fill it up, and I am good to go. My coffee pot makes 12 cups at a time, and I save a lot of money.

January 04 2012 at 11:29 AM Report abuse rate up rate down Reply
Baby

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January 03 2012 at 10:00 PM Report abuse rate up rate down Reply