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This National Coffee Chain Could Be Getting More Expensive Soon

While the company's sales are up, so is its overhead.
FACT CHECKED BY Mura Dominko

Starbucks is already thinking about Pumpkin Spice season—but it's not all about Pumpkin Spice. Based on its third quarter fiscal report published Tuesday, the coffee company indicated that it may soon increase menu prices in order to offset increases in operational costs.

Citing inflation and the rising cost of labor and supply, the company said Tuesday that its overhead would continue to increase for the foreseeable future and that it was considering price hikes, as well as a few longer-term provisions, to protect its margins.

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But Starbucks also reported a record performance, with same-store sales increasing by more than 10% compared to the same period in 2019, and by more than 83% compared to 2020. In total, the global coffee chain closed $7.5 billion in sales in its third quarter this fiscal year, surpassing expectations and setting a new company record.

Sales growth increased for a number of reasons. The chain's brick-and-mortar operations have not yet returned to normal, with only limited seating available at most locations. But as was the case with many other quick-service restaurants, Starbucks has seen substantial increases in drive-thru sales and mobile orders, which have not only made up for decreasing sales but helped to drive growth beyond pre-pandemic levels.

Mobile orders, in particular, have been an area of focus for Starbucks recently, with CEO Kevin Johnson telling Yahoo! Finance that the Starbucks' rewards program membership had increased almost 50% since last year, and that app users currently account for over 50% of U.S. sales.

Another key component of Starbucks' stellar third quarter was a boom in sales of cold beverages. Cold coffees—including Starbucks Cold Brews, Nitro Cold Brews, Refreshers, and Iced Shaken Espressos—accounted for 74% of all U.S. beverage sales, representing a 10% increase from pre-pandemic levels. As Yahoo! Finance has noted, cold brews were the "hot topic" during the Starbucks conference call, with the beverage category receiving 24 mentions (while "hot" beverages were mentioned just twice).

Based on the popularity of chilled drinks, the company plans to push sales of its cold beverages in the coming months. Iced and cold coffees are among the chain's more expensive menu items. The push will, Starbucks hopes, protect against increasing costs of operation—and perhaps keep the forecasted menu price increases at bay for a little longer.

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Owen Duff
Owen Duff is a freelance journalist based in Vermont, home of Ben & Jerry’s. Read more