Starbucks has gained a reputation for great-tasting, extravagant coffees. They’ve also gained a reputation for high price tags. I’m sure we’ve all wondered at some point… why are Starbucks coffees so expensive?
Starbucks coffee costs you more because it is convenient, and they have established brand loyalty. The clever placement of their stores also increases demand. The casual setting of their stores indirectly affects their prices. Lastly, quality justifies the expense.
There are many reasons why Starbucks can and does up the prices on their caffeinated drinks. Let’s have a look at what these are.
1. Convenience Costs You More
People often stop at Starbucks on the way to and from work, between dropping the kids off at school or even on long road trips. When you’re short on time, you may prefer to stop off at your local Starbucks instead of waiting at home for your less-than-luxury coffee machine to start up.
Starbucks knows this, and their business relies on people to resort to convenience over cost.
It is only logical that having another person make your coffee for you in a shorter amount of time than you could have done will cost you more. You don’t have to clean any of the equipment or even wash your mug.
Starbucks drive-throughs make it so that you don’t even have to step outside the comfort of your car to get your coffee delivered to you within minutes.
Of course, you could buy the Starbucks brand coffee beans or coffee pods, but many say that the taste is different and that the effect is lost when it is no longer as convenient as it would’ve been to order it at their local Starbucks branch.
2. Popularity And Brand Loyalty
With Starbucks gaining popularity over recent years, it should be no surprise that more and more people have chosen to buy their coffee there instead of other places. This means that Starbucks has established a good rapport and strong brand loyalty.
Starbucks is also a global brand, meaning that when people travel, they’re more likely to resort to a familiar brand, like Starbucks, to get their coffee from.
As demand for their products increases, the price of Starbucks coffees will naturally increase. As many people as there are who find the price tag absurd, there are probably twice as many who are willing to pay the high prices because of the brand name attached to the coffee.
3. Placement Of Stores
Starbucks and the landlords that rent out space to businesses like Starbucks understand the value of being adjacent to a high-traffic area like a subway station. Starbucks is actually cutting profits in these locations, but they’re doing so because they know the smaller, local coffee shops can’t afford to be near them.
Even the locations that aren’t near subway stations benefit from the placement of the branches that are. It’s basically free advertising. With public transport being so popular, people would rather grab a coffee somewhere that is closer to them, rather than search for a place where their coffee would cost a dollar less.
Once they have a routine of heading to the subway station, grabbing their Starbucks coffee, and heading to their destinations, they’ve formed a habit. This is where Starbucks benefits, as now, wherever people are, they are likely to head to their nearest Starbucks branch because they’re so used to it.
A new habit may be formed in as little as three weeks. So, in the end, Starbucks does not profit from better coffee, attractive baristas, or a more sociable atmosphere. They profit by obtaining high-priced real estate that their competitors cannot afford.
These higher profit margins allow Starbucks to hike up its coffee prices.
4. The Casual Coffee Shop Setting Attracts Customers
A coffee shop is generally a relaxing setting where people enjoy spending time.
In a coffee shop, you can get work done, socialize, or even draw creative inspiration from the people around you. Teenagers frequent their local Starbucks branches, as it has become a popular hangout location among their age group.
When it comes to social contact, a coffee shop may be an excellent alternative to a bar for non-drinkers.
Chances are, the longer you stay, the more coffee you will order. This is why you’ll find that Starbucks even promotes their stores as workspaces and meet-up locations.
The more customers come that come in, and the more coffees that are ordered, the higher their profits will be. And as always, the higher the profit, the higher the price tag can be.
5. Quality Controls The Price Tag
When it comes to the quality of their coffee, people can be pretty fussy.
In the end, Starbucks is recognized for employing high-quality ingredients in both its food and coffee. They use good milk, high-end coffee, and top-of-the-line ingredients. You won’t have to worry about the food being rotten or being sold over its expiration date.
When it comes to the quality of their ingredients, Starbucks has very high requirements, and each retail location will have managers on hand to ensure that everything meets or exceeds the company’s standards.
If you’re anxious about receiving a good cup of coffee when you go to Starbucks, you probably don’t need to worry. It’s likely that the coffee will be just as excellent, if not better, than any other place you may go for a cup of caffeinated yumminess in the morning.
The Bottom Line
Despite all the reservations you may have about the high prices of Starbucks coffees, I think it is apparent that the price may be justified. This company didn’t become one of the biggest coffee brands in the world for nothing, and their marketing tactics and strategic placement of their stores are impressive.
Whatever the reason is for their coffee being so expensive, it doesn’t seem to deter many people from popping into their local Starbucks and ordering yet another delicious cup of coffee. Now go out there and grab another cup!