I've just read an article on Businessweek about Starbucks (SBUX) latest price increases, and I must tell you folks, I think enough is enough! Its just too darn pricey for a cup of coffee.
Now I have a confession to make, Among my family and friends I'm maybe the only one who actually think that Starbucks coffee is tasty and consider it any good. (Actually most of them actually think that Starbucks coffee tastes pretty lousy)
Since 1997, Starbucks has been raising their prices over and over, and I'm just tired of it, As expected their revenues have been increasing as well.
Yet today it faces a challenge in continuing its growth story with just tons of new coffee shops opening every few months around the world, and higher operating costs.(mostly raising milk prices as they claim)
I think Starbucks has really reached the top, when it comes to raising its prices, they are really close to the point where customers will just abandon their old habits with coffee drinking tradition and get a coffee somewhere else, Maybe at McDonald's whose been aggressively marketing its coffee to win breakfast-time customers, or long time rival Dunkin Donuts.
After the bell Starbucks reported its quarterly results and said net income rose to $158.3 million, or 21 cents a share, from $145.5 million, or 18 cents a share, in the year-ago period. Revenue rose to $2.36 billion from $1.96 billion. Analysts, on average, were expecting it to earn 21 cents a share on revenue of $2.39 billion, according to Thomson Financial. Same-store sales rose 4% in the quarter.
What's interesting is that same-store-sales growth at Starbucks has slowed down. The company has been adding food options, including warm food at some locations; entertainment; and drive-through windows. It also has invested in equipment and labor-saving devices to relieve store congestion.
At the same time, it is seeing increased competition from rivals that are ramping up their coffee offerings.
Dunkin' Donuts is pushing to expand its coffee business, and fast-food giant McDonald's Corp. has seen success with its premium coffee and expanded breakfast menu.
The only questions remains when will customers say enough is enough!
Leave your thoughts.
Wednesday, August 1, 2007
Is Starbucks just overpriced?
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10 comments:
I agree with you. With a daily specialty coffee at Starbucks costing nearly $25 per work week..$100 smackeroos a month...enought already! Interesting to see those attractive earnings stats you've posted, too. But I could be jaded, I think their coffee tastes like hot water.
Starbucks has always been a special treat for me because of their prices. After hearing about the latest price increase-yes, they are overpriced. I can be satisfied with a good cup of coffee from somewhere else.
Enough is enough. I have always thought that Starbucks is overpriced for a mediocre cup of coffee. And, I never got into the lingo either.
Prices are going up because of Corn Prices. Corn is being used for ehtanol, but cows are fed corn too, but ethanol pays more for corn.
http://www.thedailygreen.com/2007/07/25/corn-ethanol-behind-starbucks-price-spike/4281/
I like Starbucks a lot. I get a venti at least once a week.
But, I've figured out a way to make it.
Hershey's syrup (fill the cup about an inch with the stuff...more is good) Then milk, then really strong coffee...even starbucks ground from the grocery store, then ice. Works pretty good.
Thanks for your comments guys.
Jorge, thanks for your interesting comment, glade I've learned something new.
Keep read and explore Boldinvestors.
Thanks
I just stumbled onto your blog... great stuff! I'll be sure to add it to my feed. *=)
If you think it's overpriced then don't buy it. Simple as that. Companies such as this have the guts to increase their prices because they know people will still patronize their products.
Thanks so much for the link...just love your blog! I just posted my first picture on my blog - it's a great picture of Nutmeg our kitty. I will link you on my site as soon as I find my instructions on how to do so (guess I'd better keep those handy in the future HA!) Starbucks...delicious...but I always thought they were overpriced.
Gin
I've never been too fond of Starbucks blends, so they've always felt overpriced to me. Luckily, I live in a neighborhood with two independent coffee shops that serve better coffee cheaper. It's always good to support those businesses that add local color to the neighborhood anyway.
too bad if they overpriced their starbucks coffee, but eventhough how expensive it is, my husband love it so much, he is one of the starbucks coffee addict hehe, anyway thanks again yarin for joining on my chatroom, keep up ur good work too, u got a nice topic on ur blog. hav a nice day!
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