Starbucks Raises Prices on Some Drinks -- Update

By Joshua Jamerson 

Starbucks Corp. said Tuesday that customers at many of its U.S. stores will pay as much as 30 cents more for certain beverages as prices for raw coffee have climbed amid rising operating expenses.

Starbucks customers will pay 10 cents to 20 cents more for certain sizes of brewed coffee, and 10 cents to 30 cents more on espresso beverages and tea lattes. The increases, effective at company-operated stores in the U.S., will vary by market.

In the past two years, Starbucks has raised prices on certain beverages by between 5 cents and 20 cents each year. The company on Tuesday said the latest increase was needed for "business needs."

A Starbucks spokeswoman said the price increases are the result of rising expenses, such as increase compensation rent, distribution, marketing, labor and commodities--including coffee and others.

The move comes a day after Starbucks said it would increase compensation by up to 15% for employees in company-operated stores, joining the ranks of many firms lately that have chosen to raise workers' wages.

In April, the Seattle company reported profit rose 16% as the coffee chain attracted more mobile users in the U.S. But sales didn't climb as high as Wall Street was expecting. The company is expected to next report quarterly results next week.

Meanwhile, raw coffee is becoming more expensive. Arabica coffee futures have risen 11.5% year-to-date and recently traded at $1.478 a pound on the ICE Futures U.S. exchange.

Starbucks said Tuesday that the price increase had been prematurely entered into point of sale systems in its company-operated stores, but it didn't say how many customers were affected or when the higher prices were prematurely entered.

Starbucks stock rose 1.9% to $57.39 in afternoon trading. Shares have fallen 3.6% in the past three months but are still up about 5% from a year ago.

--Julie Wernau contributed to this article.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

July 12, 2016 15:05 ET (19:05 GMT)

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