Starbucks suddenly raised prices, increasing the average price of food and drinks by 1-2 yuan, in response to the comprehensive evaluation of pricing
A news that “Chongqing Starbucks employees drove police to eat in its store” went viral, and starbucks was immediately criticized by the public.The public declared that “China can do without Starbucks, but not without the police”, and many residents threw rotten eggs and other bad behaviors in its stores. Many enterprises also started to boycott Starbucks spontaneously.Although Starbucks made an official explanation at the first time, saying that the problem occurred in the communication process of employees and there was no expulsion or other behavior, the public still did not pay the bill.Recently, Starbucks suddenly raised prices, the average price of food and drinks increased 1-2 yuan.Many netizens wondered if it was because starbucks was boycotted by the public and vowed to fight with the public to the end.But the official response is that the pricing is based on a combination of factors including market research and comprehensive evaluation.1. Starbucks suddenly raised the average price by 1-2 yuan. When Starbucks was criticized by the public for “evicting police” incident, careful netizens found that many drinks in Starbucks had a 1-2 yuan price increase.Classic drinks such as americano and cappuccino lattes have seen their prices rise.This isn’t the first time starbucks has raised prices recently. It was reported in October last year that it adjusted the price of some items in its stores to increase.The sudden price hike was widely believed to be related to the incident, but Starbucks officials said it was a “comprehensive review of various factors.”In fact, the rise in prices does have a trace.According to the data analysis of Starbucks’ financial statements in 2021, due to the interference of the return of the epidemic and the rise of market prices, Starbucks’ profits were greatly reduced, resulting in a significant decline in sales.Starbucks’ sales decline didn’t just start last year. In 2018, starbucks reported its first decline in same-store sales in China, down nearly 2% year on year.Of course, Starbucks has been facing declining sales in recent years, not only in China but also in its U.S. stores.The price increase is based on experience in the United States.Sales at Starbucks stores in the US are reported to have fallen in 2017.At that time is through the price of some drinks to seek profits, to achieve the goal of sales growth.This is also confirmed in the official financial records released in 2018, through price increases on some drinks, Starbucks sales in the fourth quarter of 2018 increased by 3% compared to the previous period.With such a successful precedent, Starbucks also tried to maintain sales by raising the price of individual products in 2021, when its sales in the Chinese market dropped significantly.However, starbucks’ price increase was so sudden that many users said they noticed the price increase when ordering the same drink on Feb. 15 and Feb. 16.It was also hard not to get netizens to link it to the incident of “evicting police” a few days ago, which made them even more angry that Starbucks’ price hike at such an important moment was a provocation to the Chinese people.In fact, Starbucks officials immediately responded, saying that the price increase of some drinks in Starbucks stores was planned long ago, and was based on a comprehensive evaluation of various factors.It had nothing to do with this incident, and the price increase had been planned for a long time, not on a whim.While the comments were not accepted by many netizens, it is a fact that starbucks has raised the price of some drinks.As we mentioned before, due to the threat of the epidemic in China in the past two years and the rise of the comprehensive price level in China, Starbucks must adjust the price of its products to withstand the impact of rising costs if it wants to continue to make profits in the Chinese market.The second is that wages need to rise, which is another high cost.In 2021, Starbucks in the US proposed to appropriately raise the salary of its Employees in the US by 5%-10% according to the nature of their work and length of service.And for the Chinese market employees, it is bound to need to be treated fairly, so the headquarters also put forward to The Chinese employees to add a “salary”, that is, an additional month’s salary as a bonus, this is the first time for Chinese employees to enjoy the “14 salary”.The pay increase is another big expense for Starbucks, which has been experiencing a downward trend in sales, which is one of the reasons that the price of all starbucks products is increasing.Let’s analyze the factors influencing the rapid decline of Starbucks sales, among which the most critical one is the fierce competition in the industry.As is known to all, Starbucks is famous for its fresh-brewed coffee of the highest quality. Unlike instant coffee seen in supermarkets, starbucks is not aimed at the general public, but at the business elite of the society.The price of freshly ground coffee alone is about 30 to 40 yuan, while the average coffee shop is only about 10 yuan.Its positioning is already high-end.This is the key to Starbucks’ success, and the reason it has been the number one in the market for years.It creates a feeling that business elites should buy their own coffee, and ordinary coffee shops are not worthy of business elites.High-end brand positioning is also doomed to lose a lot of market share, and in recent years, the momentum of luckin coffee, a domestic coffee brand, is quite fierce, and vowed to compete with Starbucks.Different from Starbucks, Luckin pays more attention to providing customers with high-quality, cost-effective and convenient coffee, which is suitable for a wider range of people and has a higher style.Starbucks has also been hurt in recent years by the frenzied expansion of Luckin Coffee, which now has more stores in China than Starbucks.By 2022, luckin will have 6,000 offline stores.Rising coffee’s strong offensive has also given Starbucks great competitive pressure. In addition, the incident of starbucks employees “evicting police” has been revealed, and many netizens have directly raised the incident to the national situation to consider.Starbucks has lost a lot of market share by backing only Luckin coffee, a domestic coffee brand.Considering the above factors, Starbucks has no choice but to increase the unit price of its products to ensure profits.After the outbreak of the epidemic and rising social prices, Starbucks’ sales have been declining. The only way to maintain its high-quality development and steady profits is to raise the prices of food and drinks slightly.Use commodity unit price to resist the interference of external factors and maintain their own development.What’s your opinion or opinion on that?