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Retail

Why Is Starbucks So Expensive

By David Krug 5 minute read

Starbucks, the world’s largest coffee store, is known for its posh atmosphere and excellent coffee. It’s also known for being pricey. Millions of Starbucks devotees continue to frequent the chain despite its high costs for coffee, other beverages, and food.

Reasons Why Is Starbucks So Expensive

Because of consumer loyalty, convenience, and quality, Starbucks is able to charge premium rates for its goods. Rent and running expenditures are also a component in the increased rates. Investments in personnel, including pay and benefits, as well as ethical and sustainable company practices, contribute to rising prices.

Finally, the high cost of Starbucks can be attributed to its accurate understanding of its market. For all of these reasons, regular clients are prepared to pay a premium for the product. To learn more about why Starbucks costs are so expensive, keep reading!

1. Brand Loyalty

Starbucks has amassed a devoted following of millions of customers over the years. Starbucks is a part of many people’s daily routines, and many can’t fathom not going there on a regular basis now. Regular Starbucks consumers aren’t deterred by high pricing or price rises since they have a strong bond with the brand.

Although increased costs for coffee and beverages are part of Starbucks’ posh brand image, the company’s revenues are not harmed by this practice. Customer awareness of the value of the complete Starbucks experience is also a factor in the increase in sales. They’re fine with paying twice as much for a cup of coffee as they would in a convenience shop.

2. People Are Willing To Pay More For The Convenience

There’s no arguing that making your own coffee saves money. However, there is no arguing that grabbing a cup of Starbucks coffee on the way to work or school is a far more convenient option.

The ease of having a professional barista pour their coffee for them and not having to clean up afterward means that Starbucks consumers are ready to pay a premium for the service.

In addition, Starbucks outlets are conveniently positioned to provide busy commuters and office employees with a cup of coffee or a calming drink.

3. Taste

While a cup of Starbucks coffee costs more than a cup from the corner store, the quality is far superior. As an example, Starbucks pioneered the widespread availability of espresso in the United States, a dramatic shift in flavor from the drip-filter coffee that had been the norm before to Starbucks.

Customers at Starbucks have repeatedly demonstrated their willingness to pay extra for superior coffee over the years.

4. Coffee Is Addictive

Regular coffee users will not be deterred by the rising cost of their morning fix, even if the price is prohibitive. Regular Starbucks consumers will not be swayed by an increase in the coffee chain’s already high prices.

5. Wages And Benefits

Starbucks provides its employees with competitive salaries and a wide range of perks, including paid time off, health insurance, and tuition reimbursement for post-secondary education.

Starbucks’ high operational expenses are a direct result of the high rates it charges customers for the desirable services it provides. In terms of public perception, Starbucks’ ethical corporate culture contributes to its widespread appeal.

In other words, customers are willing to pay more for products from a company that treats its employees well.

6. Employee Career Development

As a company that values its people, Starbucks provides extensive training at the beginning and throughout their careers. But the cost of educating staff is another important ongoing item that raises costs.

Customers are willing to pay a greater premium for Starbucks items because they prefer to buy from a firm that practices socially responsible business practices.

7. Rents And Other Overheads

The success of Starbucks can be attributed to the placement of its outlets. However, the high cost of real estate in high-traffic and affluent areas has an effect on the cost of alcoholic beverages.

Another problem is that the cost of operating a business is growing, and customers are ultimately responsible for that increase in expenses.

8. Employee Training

Starting with freshly recruited baristas, Starbucks is committed to providing ongoing training to all of its employees. A bartender-like skill set is required of new hires, for example, as they learn to make all of Starbucks’ beverages.

Due to the extensive training that Starbucks staff must undergo, the expense of training has a significant influence on the costs of beverages.

9. Ethically Sourced And Sustainable Products

Starbucks takes great pleasure in portraying itself as a socially and environmentally responsible business that sources its raw materials ethically and responsibly. For ethically grown coffee, employees are given a living wage, and their workplaces are free of hazards.

Additionally, it reduces the overall environmental effect of the production process as a whole. These methods do have the effect of raising the price of goods and services. In contrast, buyers have indicated a preference for purchasing items from companies that adhere to ethical and environmentally friendly business methods.

10. Sustainability

By pledging to reduce its carbon footprint by half by 2030, Starbucks has made a huge public commitment to sustainability.

In the past, Starbucks has established sustainability targets and failed to reach them on a number of occasions. Though it may cost consumers more money, public support for the company’s efforts to reduce waste and use renewable resources and materials is strong.

11. Innovation

Starbucks has been a leader in innovation on many fronts, with new goods including new drink tastes continuously being launched and tested.

In addition, Starbucks is a leader in the development of the “Green Cup,” which aims to reduce plastic pollution. Because of this, Starbucks just released biodegradable and recyclable cups, which might save the landfills millions of cups.

It’s not only Starbucks that’s making a public pledge to be more environmentally friendly. As a result, this level of innovation necessitates a large financial commitment, which in turn raises the cost of goods.

12. Support For Farming Communities

As well as investing in its staff, Starbucks helps the farmers and communities where the beans used in its products are grown.

With Starbucks’ Coffee and Farmer Equity (CAFE) initiatives, for example, farmers and agricultural communities are supported in safeguarding employees’ rights and sustainable farming techniques.

Starbucks consumers will have to pay a higher price as a result of this expenditure.
However, people are prepared to pay more for a cup of coffee that is ethically sourced.

13. Reading The Market Right

This list illustrates that Starbucks has done a good job of reading the market and that its devoted customers are willing to put up with higher pricing for various reasons.

Bottom Line

Since Starbucks has a dedicated consumer base, it can maintain the price of its products high. Even if Starbucks prices continue to rise, habitual customers will stick with the brand because of the quality, convenience, and overall Starbucks experience.