Price Hikes, Tight Budgets Not Enough to Deter Students from Coffee Obsession
Many college students are admitting to having a problem. They know that their habit is costing them huge sums of money at a time when every spare penny counts. They have come to terms with their addiction, yet they are unwilling to give it up.
These students are coffee fiends addicted to the mochas, frappuccinos, espressos and lattes being served up at Starbucks nationwide, and they are shelling out major bucks to relieve their coffee cravings.
Howard University students can be seen traipsing in and out of the Starbucks adjoining the campus bookstore on a consistent basis. Merell Cole began drinking coffee at the mere age of 12 after seeing her older cousin enjoy it. Now a senior political science major, Cole drinks “it to survive the day,” treating herself to a minimum of two Starbucks beverages a day.
“Right now, I get a vanilla chai latte, but my mood changes with the seasons,” Cole explained. “Last summer, it was the caramel frappuccino, in the spring passion iced tea and, last winter, I had the white chocolate mocha.” Hearing herself gush about coffee and the wonders of caramel and vanilla flavoring, Cole stopped to say, “OK, so I have a problem.” Referring to her feelings for Starbucks as an addiction, she said that the Starbucks coffee brand is so strong that when someone gets used to it, they need more and more. “It’s kind of like cigarettes, cigarettes that come in many different delicious flavors,” she said with a grin.
Cole’s need for coffee has not been easy on her pocketbook. Spending about $7 a day at Starbucks, her addiction to java costs her over $200 a month. Cole said, “I maxed out my credit card from going to Starbucks because when I had the card, I would go like three or four times a day.” Despite the high prices, Cole has no intention of cutting down on her coffee intake.
Despite the popularity of the Seattle-based coffee shop and its loyal customers, Starbucks has been hit hard by increased operating costs, causing two price hikes this year. In October, drinks went up 5 cents a cup and the price of coffee beans increased by 50 cents a pound. Starbucks officials blamed the cost increase on rising fuel prices as well as the cost of health care, labor and ingredients.
More recently, drinks saw a price boost of 9 cents a cup, which is about a 3 percent increase, in its company-owned stores in the United States. The price hike became effective July 31, and Starbucks’ licensed stores are expected to increase prices soon as well. The latest price increase is due to the higher cost of dairy products.
Additionally, Michael Casey, Starbucks’ chief financial officer, said during a June presentation at the William Blair Growth Stock Conference in Chicago which was broadcast online that it would be “very challenging” to meet the high end of its 2007 earnings forecast because of the rising dairy costs and slowing sales growth. Starbucks stock has also plummeted in recent months.
Financial analysts say the price hike is expected to take some of the pressure off of the company’s profit margins, but they worry that it may also turn some customers off of the brand.
Brittany Lester, a sophomore business management major who spends $5 to $10 at Starbucks a week, said though she enjoys the “ambiance” at Starbucks during it poetry nights, she will have to think twice before going every week due to the costs.
“I probably will cut down, but I still like hearing the poetry, so when they start that again I’ll probably go to that,” Lester said. “And I mean, it’s hot and I like the frappuccinos, so I probably will [continue going], but just not as many times.”
On the other hand, freshman Sonya Nyasulu said she did not notice that prices had increased. She said she spends about $15 a week at Starbucks and does not plan to limit her twice weekly trips to the coffee shop.
“It has to do with the convenience, and they are just everywhere,” Nyasulu said of her reason for being a loyal customer. “They’re so big, you know, they’re on every corner so it makes it a lot easier, and they’re fast too.”
Some students added that they only go to Starbucks for tea since it happens to be cheaper altogether, with the only other option being ice water.
Steve Blake, a resident of the District and a regular Starbucks patron, goes to the store about three or four times a week. “I just get regular coffee because I’m aware of the price hike and aware that $4 on a drink four times a week would add up.”
He added that the price hike would not necessarily motivate him to seek out one of Starbucks’ competitors. He mentioned that if he passed by any independent cafes, he might try them. “Starbucks always has kind of a more convenient location, but if [I pass by] Busboys and Poets, Tryst or the Diner in Adams Morgan or other places locally, yeah I’m probably going to try those places.”
Lakesia Green, a new Starbucks employee, said she was not aware of the price hike until she began working at Starbucks two weeks ago. A seasoned employee working on a drink beside Green half jokingly mentioned that prices go up about three times a year.
Green said the store has been very busy with school starting back up so she had not noticed business slowing down at all recently and believes it is unlikely to happen. She said the loyalty of customers, the popularity of the brand and the fact that “everything is pretty much homemade” keeps people coming back.
No longer are the days when coffee drinking was reserved for the older crowd of busy parents and professionals trying to get an edge with their morning caffeine fix. Frequent trips to Starbucks have become the new trendy thing to do. Although the habit is hitting many students’ wallets hard, few seem willing to kick the addiction.