The announcement that Starbucks will reduce their prices is not all as it appears to be.
According to Huffington Post, the Seattle-based chain states that 12-ounce bags of its whole and grounded coffee will be $8.99, down from $9.99. The list price of its Seattle's Best coffee will also be slashed to $6.99 a bag, from $7.99. The new prices go into effect May 10."
Though, this might not seem like a big deal to most of us, to the Starbuck's brass it is.
"Last quarter the company collected about $380 million from sales outside its cafés at an operating margin of 25.5 percent. At that level, the coffee empire is making a profit of about $2.55 per bag. Take away $1 per, and Starbucks would have to sell 65 percent more bags to book the same amount of profit," stated businessweek.com.
However, before jumping in your car and heading to the nearest location, their is a disclaimer to this "price decrease" story, it has nothing to do with the actual cafe coffees.
On the contrary, drinks in the coffeehouse has been raised.
In New York City, the price of tall brewed coffees and tall lattes increased by 10 cents, while the price for grande brewed coffees stayed the same.
Jim Olson, a company spokesman, said in an e-mail to Bloomberg News that "the changes are the result of the cost of doing business, which includes distribution, materials and commodities."
Shares of the company gained 43 percent last year compared to the year prior.
What this all means is that when it comes to the question of "why does Starbucks keep raising their prices?" the answer of "because they can. Because, no matter what they charge, we will buy it," still rings loud and true.
This article is copyrighted by Travelers Today, the travel news leader
