By Nathalie Voit
Coffee giant Starbucks announced it will again raise prices during its Q1 FY22 earnings call on Feb. 1.
The company cited ongoing supply-chain challenges, labor shortages, rapid inflation, and the impact of Omicron as key factors in its decision to take additional pricing measures this year.
The news arrives amid Starbucks’s disappointing first-quarter results.
Although global consumer demand for Starbucks coffee remains strong, the company failed to meet its quarterly profit projections as greater-than-anticipated inflation, COVID-19-related pay raises, and staffing costs cut into its revenue.
Additionally, COVID-19-related restrictions in fast-growing markets like China dampened demand and greatly affected the company’s quarterly sales prospects, The Hill reported.
Starbucks said it would take “additional pricing actions planned through the balance of the year to mitigate cost pressures, including inflation as it looks to position its business for the future.”
The planned price hikes follow two rounds of price increases in October 2021 and January 2022, according to The New York Times.
“Although demand was strong, this pandemic has not been linear, and the macro environment remains dynamic as we experienced higher-than-expected inflationary pressures, increased costs due to Omicron, and a tight labor market,” said Starbucks President and CEO Kevin Johnson in the statement.
“We anticipate supply chain disruptions will continue for the foreseeable future,” he added, noting that more price increases were on the way.
The company also blamed additional labor force costs for the markups, saying it was investing more on onboarding and new partner training “to address labor market conditions.”
However, profits for the company surged 31% to $816 million during the 13-week holiday quarter ending on Jan. 2. Revenue also grew to $8.1 billion in the first quarter, nearly 20% higher than during the same period last year, according to Starbucks’s Q1 fiscal 2022 results.
The move follows similar efforts across other industries to raise prices amid an ongoing pandemic, despite reports of record-breaking profits.
Just recently, the heavily concentrated shipping industry came under fire for lobbying against bipartisan House legislation intended to crack down on supply chain profiteering.
The largest freight companies have more than tripled their profits over the last year, upping costs for new contracts amid a recovery in demand and a clogged port situation, The Hill reported.
“Many highly-profitable industries are using the pandemic as an excuse to gouge consumers or tack on sky-high fees, and the shipping industry is no exception,” said Accountable.US President Kyle Herrig in a press release.