If you’re one of the 6 million people who relies on a cup of Starbucks to get through the day, you may have noticed the coffee chain hiked up menu prices on January 1 — and it's planning to raise them again this year.
Starbucks did not say which menu items will be more expensive or how much average prices are set to increase. According to Business Insider, rising inflation and the labor shortage have led to cost increases for the coffee giant. Those financial pressures have recently been compounded by a surge in coronavirus cases as the Omicron variant spreads.
Consumers are also taking the hit, according to Vox’s German Lopez, who points out that The Consumer Price Index — a measure of the increase in the price of goods over a specific period — rose more than 5 percent in the 12 months ending in September 2021.
"We have already taken pricing actions this fiscal year, one in October 2021 and another in January 2022," CEO Kevin Johnson said at Starbucks' first-quarter earnings call Tuesday. "And we have additional pricing actions planned through the balance of this year, which play an important role to mitigate cost pressures."
John Culver, Starbucks’ chief operating officer, said that its staff turnover was higher than pre-pandemic and that the chain had to reduce some of its store hours as a result. Alongside this, the company said that more staff had been calling off sick as Omicron cases rise, according to USA Today.
While the high employee turnover rate has "rapidly increased [employee] training costs well above historic levels," Culver said that Starbucks turnover rate was now stabilizing because of investments in wages and benefits. Starbucks has said it will hike wages this year to bring average pay to nearly $17 an hour.
"We're going to continue to make the right investments in our partners, whether that has to do with wage, whether that has to do with benefits or just really giving them the opportunity to grow with the company," Culver said during the company's first quarter earnings call in February. "And we feel very confident that we're going to come out of this in a much stronger place."
Record numbers of Americans quit their jobs in 2021 in search of better wages, benefits, and working conditions, especially after the pandemic forced essential workers to take on extra shifts with little change in pay. Other employees are organizing in hopes of improving their workspaces through unionization. Two Starbucks stores in Buffalo, New York, recently became the first Starbucks stores to unionize in decades, setting off a wave of union activity at other Starbucks locations across the country. As of this week, 54 stores in 19 states have filed for union elections, according to Workers United, the union organizing the effort.
“Starbucks is one of the better companies out there, and even companies that are great can treat workers pretty terribly,” Sam Amato, a Starbucks barista, told Eater. Amato has worked for the coffee giant for the past 12 years and is currently an employee at the Amherst, New York location that filed a petition for a union election back in August of 2021. “I would like to see more people realize that they have the power to do something that could change their workplace.”
The increase in prices, though, can’t all be pinned on worker’s wages. Starbucks has raised prices twice since last fall – once in October and again in December — to account for higher commodity, transportation, and labor costs, according to Fox. Nevertheless, the increase in coffee cost hasn’t hindered coffee consumption or consumer demand.
Starbucks' price hikes in October and January hadn't had "any meaningful impact" on customer demand, Culver said. The Seattle-based coffee giant said more U.S. customers were visiting the chain at all times of the day and spending more per visit, especially on breakfast and baked goods.
"There is a pent-up demand for Starbucks and for people wanting and longing to return to their normal routines," Johnson said.