Streamlining Pricing Procedures for Starbucks' Beverage Customizations
Starbucks has announced a significant change in its pricing structure for custom add-ins, such as syrups and sauces, aiming to simplify customization fees and reduce complexity in ordering. The new pricing system, effective from mid-2025, has been introduced as part of Starbucks CEO Brian Niccol's broader plan to streamline the menu, simplify operations, and improve the customer experience.
Under the new pricing structure, a flat fee of $0.80 will apply for any combination or number of syrups and sauces added to drinks. This fee covers all flavors, including limited-time offerings. Notably, adding just the "Classic" syrup or modifying flavor in pre-flavored drinks will carry no extra charge.
However, some add-ins will incur additional costs. Dried fruit will cost $0.50 per scoop, while matcha powder will cost $1 per scoop when added to non-matcha drinks; additional scoops to a grande matcha will be priced similarly to a venti size. Chai concentrate will add an 80-cent upcharge per serving.
These new fees replace the previously more complicated system with varying upcharges, and Starbucks is testing an in-app feature to show these pricing changes during ordering, enhancing transparency for customers.
The move is expected to reduce customer frustration and surprise at checkout, enhancing the sense of fairness and transparency. Regular customers who frequently customize multiple syrups or sauces may perceive this as a more economical and straightforward approach, potentially improving satisfaction.
However, the introduction of new upcharges on previously free add-ins or modifications has drawn negative reactions from some customers, who feel the price increases detract from Starbucks' value. The removal of discounts on some add-ins but the introduction of fixed fees may position Starbucks as more premium, possibly justifying higher prices but risking alienating price-sensitive customers.
Starbucks generates $1 billion in revenue domestically every year from the add-ins customers use to customize their drinks. The coffee shop giant stands to lose value perception as customers may be deterred by the increased prices of customized beverages.
The new app feature is designed to improve pricing transparency and enhance the ordering experience. Customers will not be charged for additional pumps of syrup or sauce. The pricing changes could potentially impact Starbucks' customer base, especially at a time when customers are cutting back on non-essential expenses.
Customers who want dried fruit inclusions will be charged 50 cents per scoop, while adding an extra scoop of Matcha powder to a Grande Matcha Latte could potentially increase the price to that of a Venti Matcha Latte. Starbucks will charge more when customers get additional product in their drink, such as an extra scoop of Matcha powder in Matcha beverages or additional chai concentrate.
In summary, Starbucks' new flat-rate add-in pricing aims to simplify and standardize customization fees, which may enhance transparency and customer experience but could also challenge the brand’s value perception among some consumers concerned about price increases. The new app feature is a response to customer concerns about pricing transparency and ordering experience.
In the context of Starbucks' revised pricing structure, the new flat fee for syrups and sauces, $0.80, falls under the category of 'restaurant finance' and 'business,' as it constitutes a significant part of the company's revenue fromCustom add-ins. The implementation of technology, through an in-app feature, is aimed at increasing 'technology' integration in the business by enhancing pricing transparency during ordering.
