Starbucks will increase the number of loyalty points necessary to enjoy free drinks and snacks next week as the company battles persistent inflation.
Enthusiasts of the restaurant chain will have to spend more in order to reap the same amount of benefits for most items in the popular Starbucks Rewards loyalty program. The alterations constitute an effort to “better align the cost of product redemptions to our current pricing,” Starbucks CMO Brady Brewer remarked during a recent earnings call.
“By making that change, it will create discount efficiency which helps us to continue to grow the program while effectively managing margin,” he told investors.
Starbucks Rewards participants can redeem a brewed hot coffee, bakery item, or hot tea for 50 stars; a handcrafted drink, hot breakfast, or parfait for 150 stars; a lunch sandwich, protein box, or salad for 200 stars; and select merchandise or at-home coffee for 400 stars. The items available at the 50-star tier will soon be available at 100 stars, while the items available at the 150-star and 200-star tiers will become available at 200 stars and 300 stars.
On the other hand, the redemption value of iced coffee and iced tea products will decrease from 150 stars to 100 stars, while packaged coffee will decrease from 400 stars to 300 stars.
The changes occur months after prices for the Pumpkin Spice Latte, one of the brand’s most popular seasonal items, increased some 4% from the previous autumn. Coffee prices in the United States have more generally increased 14.3% between December 2021 and December 2022, according to data from the Bureau of Labor Statistics, while prices for roasted coffee and instant coffee have risen 15.5% and 10.8%, respectively.
Overall food inflation reached 10.4% as of two months ago, considerably exceeding the 6.5% headline inflation rate. Food away from home, a cost category that includes spending at restaurants, increased 8.3% over the same period.
Restaurants have also languished under historically low labor force participation, which has prompted executives to raise wages and pass increased costs onto consumers. There are currently two open positions in the labor market for every one unemployed individual, according to more data from the Bureau of Labor Statistics.
Several national fast-food chains have started efforts to automate restaurant operations as the persistent labor shortages continue to disadvantage employers in the job market. McDonald’s recently created a test restaurant in Texas in which customers can use kiosks and a mobile app to grab their orders from a conveyor belt rather than interacting with staff, while Chipotle tested a robotic chip maker at a California location.
Starbucks and other restaurant chains are likewise contending with disturbances from increased levels of crime and homelessness in their urban locations. The company said last year that it would close locations in cities such as Seattle, Los Angeles, Portland, and Philadelphia amid the safety issues. “It has shocked me that one of the primary concerns that our retail partners have is their own personal safety,” Starbucks CEO Howard Schultz told employees in leaked footage. “And then we heard the stories that go along with it about what happens in our bathrooms, the issue of mental illness, the issue of homelessness, and the issue of crime.”