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

Boeing CEO Muilenburg’s total compensation rose to $18.5M

That’s up from just over $15 million a year earlier. It includes the value of stock awards in 2017.

Mother-in-law homes popular after cities ease restrictions

Lynnwood and Everett are seeing a spurt of growth after changing city codes to allow for this development.

Facebook data whistleblower: ‘Fake news to the next level’

Cambridge Analytica used created an information cocoon to change their perceptions, he says.

3 must-try doughnuts when Top Pot opens in Edmonds

After two years of work, the popular Seattle chain is opening its second Snohomish County location.

Boeing’s newest 737 Max makes first flight over Seattle

Prospects for the new aircraft — the Max 7 — are hazy, as low-cost carriers migrated to larger models.

Boeing’s an early casualty as investors dig in for trade war

The company’s share price is headed toward its biggest weekly slump in more than two years.

Superstore chain Fred Meyer to stop selling guns, ammunition

Guns have been sold at nearly 45 of more than 130 stores in Oregon, Washington, Idaho and Alaska.

Facebook bans Trump-affiliated data firm Cambridge Analytica

The company allegedly held onto improperly obtained user data after claiming to have deleted it.

Trump’s possible China tariffs bring loud protests — in US

A potential trade war could reverberate across the U.S. economy.

Most Read