Starbucks' New Price Hikes Are Enraging Customers—Here Are the Harshest Reactions
Starbucks has had a great quarter. Despite all its current troubles with labor shortages, spotty ingredient availability, and backlash stemming from its change of heart on a mandatory vaccine policy for employees, the chain's latest earnings report shows the company is doing well when it comes to sales.
America's largest coffee chain reaped major benefits during the past holiday season, reporting record revenue of $8.1 billion and profit growth of 31% for the last three months of 2021. Starbucks enjoyed more frequent visits from customers as well as higher transactions per visit, solidifying its comeback from the pandemic slump.
For more fast-food news, check out 5 Reasons Starbucks Is In Turmoil Right Now.
But the company also saw its operating costs rise due to the disruptions caused by the Omicron variant, and while menu prices at the chain have already grown twice in a relatively short span of time—once in October and most recently in January—the company sees further price increases as one of its main tactics for achieving better margins.
"Sales is, by and large, our biggest opportunity. In addition to that, as we've outlined, we'll continue to take pricing while we balance pricing decisions and actions with our demand," said Rachel Ruggeri, executive vice president and chief financial officer at Starbucks, of the company's plans to further increase menu prices. "And so that will be another big opportunity for us as we continue to grow."
Prices are skyrocketing all across the restaurant industry for similar reasons, but Starbucks' announcement that it plans on raising prices again, even while it's seeing profits grow by 31%, struck a nerve with customers.
Dan Price, the CEO of financial company Gravity Payments, started an avalanche of criticism directed at Starbucks on Twitter.
Starbucks: "we are forced to raise prices due to inflation and supply-chain issues"
Also Starbucks: "our profit just went up 31% and we gave our CEO a 39% raise to $20.4 million"
Companies are doing a great job rebranding corporate greed as "inflation"https://t.co/y8sMaFjbmm
— Dan Price (@DanPriceSeattle) February 2, 2022
"Companies are doing a great job rebranding corporate greed as 'inflation,'" Price wrote in a Tweet, pointing out the coffee chain's major profit spike as well as the fact that Starbucks CEO Kevin Johnson received a 40% pay raise in 2021, with his annual compensation jumping from $14.67 million in 2020 to $20.43 million.
Starbucks executives noted that the recent price increases have hardly impacted demand for the chain's food and beverages. However, the public's reactions on Twitter may be pointing to the fact that customers' tolerance of ever-pricier coffee is wearing thin.
I'm out @Starbucks. You won't price gouge me because of "inflation"aka GREED! Your profits have soared 31% but you still feel the need to raise prices while people are still recovering from the economic uncertainty brought on by the pandemic??Beyond despicable! App deleted! BYE!
— TVH (@inmyhead2day) February 2, 2022
— Lora (@LoraAneM) February 2, 2022
@Starbucks Another price increase? I don't know about others but you have now exceeded my pain point. Thankfully there are other alternatives. 🙅♂️
— TLogic-SaveWomen'sSports (@girlegunz) February 2, 2022
The chain has also been under fire for walking back its plans to demand workers be fully vaccinated or submit to weekly COVID-19 tests. Starbucks COO John Culver said in January that the "vast majority" of the chain's employees are fully vaccinated, but the company is still drawing ire from the general public for dropping the policy that could keep its workers and customers out of harm's way.