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Starbucks called out for 'padding profits'

July 8, 2015Written by George Anderson

When people spend as much as they do to buy coffee at Starbucks, you wouldn't think they would pay much attention when a cup goes up five to 20 cents. But more attention than usual is being paid to the most recent increase in prices at Starbucks because it's:

a) The chain that has convinced many Americans to regularly spend once unthinkable sums of money to purchase coffee;

b) The company led by Howard Schultz, who some politically conservative people view as an adversary because he doesn't share their views;

c) Raising prices even though J.M. Smucker just announced a price decrease on brands including Dunkin' Donuts, Folgers and others because the cost of Arabica beans have fallen.

Starbucks, which is coming off a quarter when profits were up 18 percent, has been accused of padding its profits with the most recent increase in coffee prices.

Starbucks coffee
Photo: Starbucks

Joe Kernen, co-host of Squawk Box on CNBC, according to a report on the conservative NewsBusters website, said on yesterday's show that while he would "normally defend" a company's decision to raise prices, he was taking issue with Starbucks doing so because of Mr. Schultz's views on environmental issues and race relations. Mr. Kernen described the Starbucks CEO as "preachy and sanctimonious and self-righteous."

With the price increase, the cost of a venti (Starbucks for large) coffee in most locations around the U.S. is now $2.45 for a 20-ounce cup, according to Bloomberg. The chain is not raising prices on its popular Frappuccinos or food.

Starbucks spokesperson Lisa Passe said in a statement that the company evaluates pricing on an on-going basis "to balance the need to run our business profitably while continuing to provide value to our loyal customers and to attract new customers."

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