Starbucks Raising 'Complex Drink' Prices

But lowering prices on smaller, more basic drinks

SEATTLE -- Starting in several cities on Thursday, Starbucks customers began paying more for larger and more complex drinks and less for smaller and more basic drinks, reported The Wall Street Journal. In some markets, customers will pay a nickel more for a venti, or large-sized, cup of vanilla bean- or coffee-flavored frappuccino; 15 cents more for a venti mocha or vanilla latte; and 25 cents more for a venti caramel macchiato. An additional espresso shot or an extra dose of milk or syrup also will cost another 10 to 15 cents; however, a tall latte or cappuccino will [image-nocss] cost a dime less, while a tall hot or iced brewed coffee will cost a nickel less in some markets.

Starbucks first disclosed in April that it would adjust prices, said the report, but it did not give specifics. In recent days, memos went to baristas nationwide advising them to "expect customers to be sensitive to pricing changes in this economic climate," according to a memo reviewed by the Journal . The memo instructs baristas to tell customers that price increases reflect the increased cost of doing business and that price cuts are meant to show that the Seattle-based coffee giant is looking for ways to provide value.

Employees in San Francisco, Denver, Portland, Ore., and Raleigh, N.C., confirmed the increases in those cities, the report said. Starbucks spokesperson Valerie O'Neil declined to identify cities where the pricing changes first take effect, but confirmed for the newspaper that they will roll out nationwide over the next few months.

She said the increases reflect higher costs for labor and ingredients. "This is the first time we've ever lowered prices," O'Neil said, adding that in some markets, even drinks that are increasing in price will remain below competitors' prices.

Starbucks has been struggling lately to attract and retain cash-strapped customers amid the recession, said the report. But Starbucks reported better-than-expected earnings for the quarter of $151.5 million versus a loss of $6.7 million a year earlier.

Specific pricing changes will vary by market, based on a given area's cost of goods and labor. "There may be pricing differences between stores of close proximity and between company-operated and licensed stores," the memo said.

To soften the blow for customers unhappy with the price increases, Starbucks told baristas they can use change from a change cup at the register to make up the difference during the first four days following the price hike.