This is a really good article from a stock market blog about the recent nine cent increase at Starbucks.
I want to add to it a little bit. I'm perplexed as to how when there's a price increase at Dunkin' Donuts or McDonald's, the customer knows about it when he's being rung up, while in the case of a Starbucks price increase, you hear about it in the news media, it's a really big to-do. The competition Starbucks is facing from Mickey D's and Dunkin' in the form of coffee is really overblown. As Lee points out, the stores cater to entirely different markets. I'll give myself as an example. Recently, a Starbucks opened up a couple of miles from my house, on a really busy road. A few months prior to that, a Dunkin' Donuts opened at my local shopping center, which is just around the corner from my house. I don't drive, and I'm a coffee drinker, so you'd probably assume that I am a regular at Dunkin' Donuts. But I'm not. I walk a pretty far distance, in hot weather, to drink my iced coffee at Starbucks.
The reason is fairly simple. These days, I'm looking for a job, so I need a quiet place to go over openings and write out resumes. I also always have at least a couple of books to read for recreation. I'm hopefully going to law school next year, so I'm also researching into that. Dunkin' Donuts isn't a place where I can do that comfortably. Starbucks, on the other hand, has stools, long tables, a few sofas. So I'll gladly go a little out of the way for that experience.
The article does make one error, though. I've never paid 5 and change for a drink at Starbucks. Not yet, anyway. The only drinks that cost close to that much are the Frappuchinos and the vente-size mochas and the Caramel marcha-however-the-hell-you-spell-it. I get a large cup of iced coffee for around 2.70, with refills for 55 cents. Dunkin' charges 3 dollars for an iced coffee. The only positive is that they add milk and sugar for you, but that's not something that I can't do myself.
Plus, I haven't been going to the new 'Bucks for that long, and they already know what I drink. They even know that I want room for milk. I've never seen that kind of service at other big places. I'll gladly pay an extra nine cents for that.