Caffeine may be the jolt your system needs to get going — but your wallet is also taking a hit every time you visit Starbucks. The coffee giant raised its prices back in October due to inflation, increased demand and, of course, the COVID-19 pandemic. January 2022 saw another price bump from the popular chain. It's not likely to be the last hike, as restaurants see the costs for goods increasing, with everything from milk to bakery items on the rise.
Kevin Johnson, CEO of Starbucks addressed the issue on the company's quarterly earnings call this week, a Starbucks representative told TODAY Food.
“We have already taken pricing actions this fiscal year, one in October of 2021, and another in January of 2022, and we have additional pricing actions planned through the balance of this year, which play an important role to mitigate cost pressures, including inflation, as we position our business for the future," he said.
Johnson said that the rapid spread of omicron was also a factor, since stores had to adapt to COVID safety protocols, causing more employees to "leverage our COVID isolation benefits as they were either home sick or home isolating after being exposed to the virus, which led to significantly higher COVID-related benefits pay than expected.”
And while customers may have noticed that their local Starbucks stores have revised opening hours or closed earlier, the company has hired more workers in the last quarter, which also requires more money for training. With the chain recently raising its minimum wage to $15 an hour, and most baristas projected to earn between $15 to $23 per hour by the summer, Starbucks continues to incentivize workers amid increased unionization efforts and a challenging labor market.
Starbucks didn't specify specific price increases, but prices vary from location to location with its popular beverages more expensive in some markets. USA Today reported that in Fort Lauderdale, a venti cappuccino cost $4.95 before tax but the same drink in Starbucks New York City was even higher at $5.45.
According to Reuters, profit margins for the company were lower than expected. Starbucks reported profits of 72 cents per share, lower than the Wall Street estimates of 80 cents. Starbucks also revised its expected adjusted earnings per share growth forecast for 2022 to 8-10%, down from at least 10%. To compensate, the company plans to cut spending on marketing and promotions.
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