Though coffee costs have been falling in recent months, Starbucks plans to raise prices by an average of about 1 percent on some beverages in the U.S., a spokeswoman confirmed Monday.
For some of those markets, it would mark the first price change in 18 to 24 months. The increases were deemed necessary to address increasing rent, labor and non-coffee commodity costs, as well as competitive dynamics.
The price increases are scheduled to take effect on Tuesday, and less than one-third of drinks will be impacted. Starbucks declined to offer specifics but said that the biggest increase would be 10 cents in markets where the price of a tall coffee is going up.
In May, the Seattle-based coffee company dropped pricing by 10 percent on its packaged coffee sold in grocery and other retail outlets due to declining coffee commodity costs.
Also on Tuesday, Starbucks is introducing a line of summer drinks, including a new addition to the Refreshers energy-drink platform that debuted last summer.
The chain will debut a Valencia Orange Refresher, available as a handcrafted drink in stores and as a VIA instant flavor. The new flavor will join the existing Cool Lime and Very Berry Hibiscus lineup.
Refreshers are made with green coffee extract, offering a caffeine boost along with fruit juice. At the Jefferies Global Consumer Conference last week, Troy Alstead, Starbucks’ chief financial officer and chief administrative officer, said the Refreshers contributed to a 6-percent same-store sales increase in the Americas region during the second quarter, bringing in new afternoon traffic.
“It really targets an entirely new daypart,” he said. “It helps stretch people into that under-leveraged time of the day when we have significant opportunity, and, by itself, added about a point of incremental comp in that second quarter.”
In a promotion dubbed the “3 p.m. Wake-Up Call,” on Thursday through Saturday, Starbucks will be offering the Refreshers line for half price between 3 p.m. and 5 p.m.
Also debuting on Tuesday are Shaken Iced Peach Green Tea Lemonade, Orange Spice Iced Coffee and a Kati Kati Blend of East African coffees. All are available for a limited time.
Increasing focus on food
In addition to spending more for some drinks, Starbucks is hoping customers will spend more on food. At the end of April, Starbucks began rolling out three new pre-packaged salad options, now available across the U.S., including:
• Chicken & Greens Caesar with fresh kale and roasted tomatoes;
• Zesty Chicken & Black Bean with grilled chicken, black beans, roasted corn, julienned jicama, spring onions and quinoa;
• Hearty Veggie & Brown Rice salad bowl with roasted butternut squash and beets tossed with chopped kale and red cabbage, steamed broccoli, peas and a lemony Tahini dressing.
The salads all have fewer than 430 calories and a recommended price of $6.95.
Alstead said food offers a significant growth opportunity for the beverage-focused chain, and the company is planning changes to build up the menu. In the U.S., food is about 19 percent of the sales mix at Starbucks, he said. About one-third of transactions in U.S. stores include a food item.
In the past, Starbucks’ food offerings haven’t met customer expectations, and the menu hasn’t always matched the occasion, he said.
With the acquisition of the San Francisco-based bakery chain La Boulange last year, Starbucks is slowly rolling out new bakery products in its retail stores over the next 18 months, city-by-city. The goal is to encourage beverage consumers to buy more food along with their drinks, but also to drive new traffic.
“We know that food can be a driver of traffic,” said Alstead at the analyst conference. “It can create an opportunity for somebody to come in, in the afternoon at midday, when perhaps otherwise they would have made a different choice. And better food also sells more beverage, so we see a tremendous opportunity here with food as a consistent driver of growth over time.”
Starbucks has more than 18,000 locations globally, including more than 11,000 in the U.S.
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