Starbucks Raising Prices In Some Markets

By: CBS News (Posted by Melissa Brunner)
By: CBS News (Posted by Melissa Brunner)

(MoneyWatch) It's getting a little more expensive to have a Starbucks habit.

The Seattle-based coffee company said Tuesday that it would hike prices by an average of 1% in the Northeast and Sunbelt regions, where prices haven't been raised in roughly five years.

Starbucks is following the lead of other food companies, including McDonalds and Chipotle, which have hiked prices in the past year to cope with rising commodity costs.

The company said the average price of a "tall" -- the smallest drink -- brewed beverage will rise by 10 cents in New York. This morning the price hike was already in effect, as caffeine cravers shelled out $2.01 for a cup of coffee, up from $1.91. The coffee house allows for some regional pricing, so the actual cost of your morning habit could vary. But that could easily bump the price of a large -- "venti" -- latte over $4 a cup, not including tip.

If one of your resolutions is to cut costs this year, it might be worth noting what your coffee habit is going to cost you over time.

If you buy one $4 latte each day, that coffee habit will set you back $28 a week, about $120 a month and $1,460 per year. Keep that up for five years, and you've slurped away $7,300, not including any money you might have earned by investing your cash instead. If you account for missed investment returns, the loss amounts to roughly $9,300 (assuming a 9% average return).

After 10 years, your Starbucks habit costs you a car. After 30 years, the $239,891 that you drank away (including investment returns), could have bought a house. Over 40 years, the Starbucks habit could reduce your retirement nest-egg by an astounding $634,428 -- enough to generate an income of more than $2,600 a month.

No one is suggesting that you give up your daily jolt of joe. (This would be a particularly unlikely suggestion from me -- the person whose caffeine addiction built that impressive tower of latte cups.) But you might want to consider a cheaper way to go at it.

Costco, for example, sells a 2.5 pound bag of Starbucks French roast for $22; A couple gallons of milk will run another $7. For that $29 -- roughly the cost of a week of barista-made lattes - you can have a pot of lattes every day for at least a month. Net savings: $91.

Invest that in a diversified basket of stocks and you could have your jolt and your retirement plan too. Based on these numbers -- and investment returns of 9% annually (about the historic average) -- the amount you save by brewing your own Starbucks coffee could be worth $481,108 at retirement 40 years from now.


Comments are posted from viewers like you and do not always reflect the views of this station.
powered by Disqus
631 SW Commerce Pl. Topeka, Kansas 66615 phone: 785-272-6397 fax: 785-272-1363 email: feedback@wibw.com
Copyright © 2002-2014 - Designed by Gray Digital Media - Powered by Clickability 136627243 - wibw.com/a?a=136627243
Gray Television, Inc.