Your Starbucks Habit Will Keep Getting More Expensive, The Company Says
Starbucks has some bad news for customers who regularly enjoy its popular beverages: their coffee habits will continue to grow more expensive.
Following price increases in October and January, Starbucks will be putting the squeeze on customers again in the coming months, with "pricing actions" scheduled for "the balance of ," according to ex-CEO Kevin Johnson, who left his post this month. Citing inflation and increased costs of employee benefits and training, the company is hoping to shore up its margins with more price hikes.
For more, check out This Iconic Symbol of Starbucks Could Soon Be Phased Out, the Company Says.
Starbucks ' profits shot up 31% last quarter, reaching $816 million, and the company also increased the salary of ex-CEO Kevin Johnson by 40% to an eye-watering $20.43 million. For those reasons the announcement that the chain plans on increasing its prices even further drew major backlash on social media last month.
The cost adjustments were originally floated by Johnson back in February, during Starbucks' first-quarter earnings call. Along with inflation and employee benefits, Johnson cited employee wage increases as a reason for the forthcoming cost increases. Starbucks ' overhead will be heavier this year as the company makes good on a promise to raise barista wages to $17 per hour.
Johnson has since retired from Starbucks and has been replaced by interim CEO Howard Schultz, who was at the helm of the chain in the 1990s and 2010s. Starbucks is hoping Schultz will be able to work his magic again, as share prices are down 31% since last summer, and as The Wall Street Journal points out, ongoing inflation could reverse the company's sales growth, as it did in 2007 and 2009.
But Schultz's most difficult task may be selling the public on forthcoming cost adjustments and keeping fans from flocking to cheaper competitors like Dunkin'.
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