Starbucks Hiking Prices Again -Natalie Rodriguez

July 6, 2015

Starbucks Hiking Prices Yet Again 

Starbucks coffee, the largest coffee chain and one of the largest chains in the U.S. has reported that they will be raising some of their drink prices by 5 to 20 cents. Although the company didn't specify which drinks they would be raising, they did state that it would be mostly hot beverages and bigger sizes of drinks that would be affected. On the other hand, items on their menu like food, packaged coffee products, and  Frappucinos wouldn't be raised in price.

    The only problem is for the people that make up the untouchable demand for Starbucks coffee. If the demand is high enough, consumers will be forced to pay more and more for their regular product. However, if the demand goes down due to the unattractive spikes in price and new punches to their wallet, the company will be on the bad end of the deal and be forced to lower prices to original prices. The only way Starbucks is able to change pricing is because of the steady flow of the relationship between supply and demand. The supporting evidence fro Starbucks and their actions is that they reported $4.6 billion in net earnings last year in net earnings despite other company challenges. They are also proven the largest of America’s coffee shop chains and have recently opened six hundred new storefronts within the past year. The competition between Starbucks and their biggest competitor Dunkin' Donuts have increases dramatically since Dunkin’ Donuts’ costumers surveyed and said their satisfactory as risen while Starbucks satisfaction from costumers have dropped since last years reports. The raise in prices will effect the economy in a good way for the corporation of Starbucks and for their employees because income will increase, employees will be paid with better benefits, and there will be more available funds for their tuition reimbursement program. 

    This change in pricing can also negatively affect the economy for the common, middle class people that regularly buy Starbucks products. More of their money will be going into a want item, yet addicting item like coffee. When some selective goods do up in price, other companies have to raise prices too when respect to resources and how they are being utilized to produce. This results in a higher Consumer Price Index. In this trend, national GDP will also change in negative ways for consumers. It can start as wanted products raising in price to much needed products raising in dollar. This will leave the people spending more for their usual needs while being stuck in a financial rut because their income is not keeping up with their new spending expenses.

http://money.cnn.com/2015/07/06/news/companies/starbucks-price-hike/index.html