Starbucks price increases again official response: comprehensive evaluation of operating costs and other factors pricing

2022-04-25 0 By

On February 16, the coffee chain Starbucks quietly raised the prices of some drinks and food, including American-style coffee by 2 yuan per cup and other drinks and food by 1 yuan.Starbucks stressed that this price increase is the second time it has adjusted the prices of its products in the Chinese mainland since 2018.According to an interview with Huanqi.com, starbucks Enterprise Management (China) Co., LTD., the official said that starbucks will raise the price of some drinks and food in its stores on the Chinese mainland by a small amount starting from February 16, 2022, citing starbucks’ official response in China.All packaged coffee beans and coffee cups and other peripheral goods are not within the range of price adjustment.”Our pricing is based on a number of factors, including operating costs,” starbucks said.We will continue to provide our customers with a great Starbucks experience.”Official reporter by querying the starbucks App that big cup of coffee, for example, the brand’s latte from 32 to $33, relapsed RuiBai from 37 to 38 yuan, cappuccino from 32 yuan up to 33 yuan, americano, 28 yuan up to 30 yuan, cold extraction iced coffee and vanilla from 35 to 37 yuan/hazelnut latte flavor from 34 to 36 yuan,In addition, food commodities have varying degrees of price rises.Earlier this month, Starbucks CEO Kevin Johnson said on an earnings call that it would raise prices more than once this year.He believes that although price increases cannot reverse the adverse economic and consumer environment, but can pass on the impact of rising costs to performance to a certain extent.Mr Johnson said starbucks had taken two “pricing actions” in the past four months and expected more this year as retail wage increases and other cost increases hit bottom line.Starbucks expects to continue raising prices in the coming months to cope with a profit squeeze from inflation and labor market issues related to the pandemic.Starbucks CFO Rachel Ruggeri also noted on the call that inflation, epidemy-related expenses, new partner training and support costs, and reduced sales due to traffic restrictions “will result in more than 200 basis points of incremental margin pressure” in fiscal 2022.Starbucks has taken and will continue to take steps to offset these pressures, including “selectively accelerating price increases and tightly managing many cost areas,” Ruggeri said.In October 2021, Starbucks announced that it would raise wages for its U.S. employees by 5 percent to 10 percent, depending on length of service.In November 2021, Starbucks China announced that starting from October 2021, all full-time retail employees in Starbucks China will enjoy the “14 salary” for the first time, that is, one month’s salary will be added to the original 13 salary as a bonus.Starbucks reported a 3% drop in international same-store sales in the first quarter of fiscal 2022, as demand for coffee weakened in the international market excluding the US, according to the company’s first-quarter financial results released on Feb 1.In China, the second largest market, same-store sales fell 14 per cent, average unit prices fell 9 per cent and transaction volumes fell 6 per cent.Some vertical media analysis said that In 2021 starbucks in the Chinese market two-way pressure.Due to the impact of the epidemic and rising costs and prices, Starbucks has been hindered in its sales expansion and its profit margin has been eroded. Meanwhile, the rising coffee brands in China are eyeing Starbucks closely and trying to take advantage of its “attack on both sides” to make a strong force in the market and seize brand share.In the face of such internal and external problems, Starbucks management saw price increases as a way to boost profitability. Both Kevin Johnson and Rachel Ruggeri publicly talked about continuous price increases, but it seems that in addition to repeatedly raising prices,Other new policies to stabilize market share and reverse the decline in sales are worth further attention.