How Much Will America Pay for a Cup of Joe?

Jul 22, 2004
George Anderson

By George Anderson

Starbucks completely changed the notion of how much Americans were willing to pay for a cup of coffee. And the company is not done testing the limits just yet.

According to a
report, Starbucks intends to raise coffee prices an unspecified amount next year. It will be the first price hike for the chain in more than four years.

Starbucks made the announcement on conference call with analysts yesterday to discuss the company’s third quarter results. Profits for the coffee chain in the last quarter were $98 million. The company plans to open 1,300 new shops this year and an additional 1,500 next year.

Moderator’s Comment: Will price elasticity become an issue with Starbucks? How much higher can the company go with coffee and coffee-based drink prices?

Personally, we reached our price limit with Starbucks awhile ago. We’ll go to Dunkin’ Donuts and get our extra-large for under $2. The coffee tastes better
and stays warmer longer in the DD cup. Of course, with 2,500 shops opening this year and next, clearly there are many others that do not share our opinion on this subject.

George Anderson – Moderator

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