Starbucks will increase prices this year, the coffee giant said Tuesday, blaming supply-chain disruptions and a sharp rise in labour costs.
For the last three months of last year, the company’s profit soared 31 per cent, to $816 million, Starbucks said in reporting its quarterly earnings Tuesday. Revenue grew to $8.1 billion, a 19 per cent jump compared with the same quarter a year ago.
The company raised prices in October 2021 and again in January 2022, executives said Tuesday, and more increases are coming.
"We anticipate supply-chain disruptions will continue for the foreseeable future," said Kevin Johnson, president and chief executive of Starbucks. "We have additional pricing actions planned through the balance of this year, which play an important role to mitigate cost pressures including inflation."
The price of menu items at fast-food restaurants rose 8 per cent in 2021, the biggest jump in more than 20 years, according to government data, with the chains citing higher costs for food, transportation and workers. Starbucks also said it had increased spending on Covid-19 pay, including paid time off for employees to receive vaccinations or to those who contracted the virus. It also said it was spending more on training “to address labour market conditions”.
“Although demand was strong, this pandemic has not been linear,” Mr Johnson said in a statement, adding that the company had “experienced higher-than-expected inflationary pressures.”
John Culver, the chief operating officer, said the price increases had not made "any meaningful impact to customer demand".
Starbucks shares fell as much as 5 per cent in after-hours trading after it announced its results, for its fiscal first quarter, before recovering some of those losses. – The New York Times
