Starbucks raising prices despite lower bean costs

NEW YORK — Starbucks wants a few extra pennies for that latte.

The Seattle-based coffee company says it’s hiking prices on average by 1 percent nationally starting on Tuesday. But it says the price for many drinks, such as medium and large brewed coffees and Frappuccinos, won’t change in most its 11,000 U.S. cafes.

“Less than a third of beverages will see a small increase in most stores,” said Lisa Passe, a Starbucks spokeswoman. She noted that the increases will vary by region and may apply to different drinks.

Depending on the market, Starbucks Corp. notes it’s the first price hike most customers will see in about two years.

The price hike comes despite falling coffee costs that have boosted the company’s profits. In the last quarter, Starbucks cited lower coffee costs for a stronger operating margin, which represents the money it pockets from sales after subtracting what it pays to keep stores running.

And those lower coffee costs are expected to continue padding its bottom line.

Earlier this month, a Janney Montgomery Scott analyst issued a note to investors saying Starbucks is likely to benefit from lower coffee costs for the next few years. Based on the price of a coffee contract at the time, Mark Kalinowski estimated that Starbucks would pay about half the $1.4 billion it did for coffee in 2012.

But Starbucks notes that coffee represents just one of its many costs and historically has accounted for less than 10 percent of overall store expenses.

Passe said other expenses include rent, labor, marketing, equipment and other ingredients such as milk and sugar.

More in Herald Business Journal

Bond sale reveals Paine Field terminal cost is about $40M

Propeller Airports, which is building on land leased from the county, raised the money in February.

Explosive decompression at 32,500 feet. What happens?

Expect a violent windstorm where the pressurized air inside the passenger cabin rushes out.

Will activism in high school hurt your college chances?

By Anna Helhoski / NerdWallet Students risked disciplinary action at nearly 3,000… Continue reading

How new tax rules on home-equity loans affect you

To deduct interest, the money must be used for the property that the loan is secured against.

Giant power storage ‘batteries’ show promise

The systems could reduce the impact of power outages, whether they’re caused by storms or hackers.

Early 787 test plane is dismantled for reuse, recycling, or scrap

The first jet delivery was more than three years late and added billions of dollars to development costs.

61 companies will be at career fair Tuesday at Tulalip casino

Job seekers can check in early and pick up a booth map and job-seeker resources.

This is one trend that’s come back around

On Record Store Day, old-fashioned vinyl is more popular than ever.

County planners seek denial of Woodway-area luxury condos

Concerns remain over design and traffic plans for the 3,081-unit development at Point Wells.

FAA orders more engine inspections after Southwest accident

The agency is requiring inspections of hundreds of jet engines like the one that blew apart this week.

Audit clears Facebook despite Cambridge Analytica leaks

The heavily redacted audit by PricewaterhouseCoopers is available on the FTC’s website.

Wells Fargo to pay $1B for mortgage, auto lending abuses

It appears that none of the $1 billion will go directly the victims of Wells Fargo’s abuses.