Starbucks Hikes Prices in Northeast, Sunbelt Cities

SEATTLE -- Coffee drinkers will be digging deeper into their pockets the next time they visit a Starbucks location in cities spread across the Northeast and Sunbelt regions of the country.

The changing of the calendar brought with it an average 1-percent price increase in such cities as New York, Boston, Washington D.C., Atlanta, Dallas and Albuquerque, N.M., according to a report by Reuters.The move comes two months after the coffee giant inched up prices in other U.S. markets, as CSNews Online previously reported. In November, Starbucks locations in the Pacific Northwest, southern California, Hawaii and parts of the Midwest saw increases of around 10 to 20 percent.

Starbucks' latest price increase comes as the cost of staples such as coffee, milk and fuel are expected to rise, cutting into the company's profits. Starbucks is not alone, according to the report, as other restaurants operators such as Chipotle Mexican Grill and McDonald's Corp. are hiking their prices as well.

Specifically, Starbucks spokesman Jim Olson said the prices of 12-ounce "tall" brewed coffees and latte drinks will rise 10 cents in New York City. Prices will also rise on about half a dozen other beverages, he noted.

Olson also pointed out that the price for the a 16-ounce "grande" brewed coffee, Starbucks' most popular beverage, remains the same across the United States and has not changed since January 2011. The price for grande lattes is unchanged in most markets, he added.

The locally based chain has not made across-the-board price increases since 2007, choosing instead to adjust prices on a market-by-market basis. Starbucks said its pricing decisions are based on multiple factors, not just the price of coffee, which has eased lately, according to the news report.

"These adjustments are the result of balancing the cost of doing business with competitive dynamics in these markets," Olson said.

Starbucks' cost of doing business includes expenses related to distribution, store operations and commodities, including fuel and ingredients for food and beverages, he said. The company is also in the process of remodeling approximately 1,700 cafes.