Have you noticed the cost of your favorite Starbucks order continues to rise? It’s not your imagination. Whether you enjoy a plain cup of joe or like to order the latest “secret menu” drinks, prices at the coffee giant will continue to climb, according to company leaders.
As part of the corporation’s quarterly earnings call, Starbucks confirmed that prices for their popular beverages jumped last month. The company had just increased prices a few months ago, in October 2021, so the January 2022 bump marked the second time in three months that prices have increased for customers.
The news of rising prices came even as the company reported a record-setting $8.1 billion in first-quarter revenue, with global sales increasing 13%.
If Starbucks is seeing record earnings, then why are customers paying more?
Starbucks president and CEO Kevin Johnson addressed the challenges facing the company that led to the price hikes. He cited growing demand for Starbucks products combined with significantly rising costs as the primary cause for higher prices. The continuing challenges of navigating supply issues while meeting consumer demand in the age of COVID have proven difficult for the coffee conglomerate, the CEO said.
“The highly transmissible Omicron variant amplified staffing shortages in our supply chain, resulting in higher-than-planned distribution and transportation costs,” Johnson told investors during the Feb. 1 quarterly call. “We also experienced a significant increase in our industry-leading COVID isolation pay for our partners, and we saw higher-than-anticipated costs, from training and onboarding of new Starbucks partners.”
That, combined with the “accelerated inflation” in the United States, offset a lot of Starbucks’ anticipated gains in the financial market, said Rachel Marie Rugger, Starbucks Chief Financial Officer and Executive Vice President.
Both Rugger and Johnson confirmed more price increases are planned in 2022 to combat the rising expenses, although neither indicated what customers can expect to see when paying for their Starbucks order in the future.
“We have already taken pricing actions this fiscal year, one in October of 2021, and another in January of 2022, and we have additional pricing actions planned through the balance of this year, which play an important role to mitigate cost pressures, including inflation, as we position our business for the future,” Johnson said in the earnings call.
So, you might want to take a look at your coffee budget and make the necessary adjustments before you head to your favorite Starbucks drive-thru.