Starbucks China Increases Prices for Certain Products

Many Chinese web users took to social media on Wednesday to comment that Starbucks has raised the price of various products by 1-2 yuan ($0.16-0.32), including americanos, lattes and a range of food items. This comes shortly after the firm became caught up in a brand image and food safety crisis in the country.

Starbucks responded that starting Wednesday, it had slightly increased the prices of some beverages and food offerings in its stores in the Chinese mainland. All packaged coffee beans, coffee cups and other peripheral products are not included in this price adjustment. Final pricing is to be set after considering a number of factors, such as operating costs.

Kevin Johnson, the Global CEO of Starbucks, said in an earnings call on February 3 that the firm expects to continue raising prices in the coming months to cope with a profit squeeze caused by inflation and epidemic-related labor market issues. As early as October 2021, Starbucks made a round of price adjustments for its menu items.

On February 1, Starbucks released its financial report for Q1 of fiscal year 2022, which showed that the same-store sales in China decreased by 14%, the average customer unit price fell by 9%, and the transaction volume declined by 6%. As of January 2022, Starbucks has a total of 5,557 stores in China.

Besides Starbucks, Canadian chain Tim Hortons Coffee also completed a price increase a month ago. A source revealed: “This price adjustment is mainly due to the consideration of market operations, and a small price adjustment has been made for nine products, ranging from 1-2 yuan.”

In recent years, a large number of new domestic coffee brands have emerged in China, with Manner and M Stand receiving capital investment in 2021. M Stand plans to continue expanding its first stores in Beijing, Suzhou, Nanjing, Wuhan and Chengdu, while Manner has now opened nearly 200 stores.

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Seesaw has also expanded, opening nearly 30 stores in the first half of the year, exceeding the sum of the past few years. It is still sprinting to reach the milestone of 100 stores this year. Many new brands, such as Algebraist Coffee and Secre Coffee, have also been accelerating their expansion, squeezing the market share of Starbucks.