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Starbucks Raises Price 27% For Espresso Shots

I remember my first espresso experience. It happened in New York with a guy that I hired to manage our trade shows. He took me to this hip and relevant coffee shop and ordered up espresso's and pastries.

He handed me my espresso and I asked him what this was? He said to drink it slow, savor it and that it is very concentrated coffee. Two gulps later the cup was empty, the pastry was gone and he was still nursing his cup. I told him I liked hot coffee and nursing an espresso wasn't for me.

He bought me another one to keep me quiet.

I also remember my first Starbucks experience. This was well before Michigan had its first Starbucks. In fact if my memory serves me correctly, we were one of the last states to land a Starbucks. Coffee in this town always meant stopping at the gas station or Dunkin.

We were in Vegas on vacation with my brother and his wife who lived in Florida. Starbucks invaded Florida rightfully so and she got hooked on Starbucks. There just happened to be a Starbucks in the casino hotel we stayed at (Treasure Island) and if we didn't stop and have Starbucks, she would of ranted and raved all day long. After just one minute of her ranting, we ran to Starbucks.

The line was out the door, around the casino, which led to being around the pool which let to being down the Strip which led to standing and waiting for a very long time. Any attempt to leave the line would have resulted in A: broken knee cap B: two more days of ranting and/or C: divorce from my brother. We stayed in line.

I had my first Cap and it was quite tasty. But then after waiting in line for so long, a cup of Joe from White Castle would have been tasty. Needless to say, we had to endure this each morning of our stay.

Back in Michigan, since there were no Starbucks, it was back to normalcy. But a year or two later, they invaded Michigan with a thunderous landing. I started out doing Friday's. Then it was Monday's and Friday's. Then it was M-W-F. Then it was M-F (still, never on weekends). The only solace was that my sister-in-law was still crazier than I am-she does weekends.

Anyway, this story has gotten way too long and it's time to get to the point. I went today for my usual triple Grande wet cap extra hot and the barista told me $4.08. I paid $3.71 yesterday. The barista and the rest of the staff were in mourning and explained the new prices started today. Extra espresso shots zoomed from $.55 to $.70. Grande's zoomed up $.15 as well. Large coffees crossed the $2.00 zone.

The increase is $.37. Multiply that by 5 = $1.85 and multiply that by 50 weeks = $92.50 annual increase.

Howard Schultz, founder of Starbucks is no dummy. He calculated that Starbuck's zealots like myself will go into shock the first day or even first week, and then get over the shock and ante up the $92.50 which of course will go right to his bottom line. He figured that a small percentage will defect to Dunkin or Mickey D's but overall, his take will be bigger.

There is a lesson to be learned from this. If you have zealots as customers, raise your prices. If you can raise prices during the worst economic times of our times, just think what the future holds when times get better. Hmm, it might be a good time to buy Starbuck's stock which already zoomed from $9 to over $19. Or I can give up the coffee for a week buy one share a week instead. At the end of year, I will have something of value instead of pissing it away.

Happy Thursday!


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