Starbucks Corp. announced on Tuesday that its menu prices are going up, with a price increase to affect all of the Northeast states in the U.S. and the Sunbelt to offset its costs.
The price hike is set to increase one percent on average, affecting major cities like New York City, Boston, Washington D.C., Dallas, Albuquerque and Phoenix.
For example, the price of a 12-ounce tall latte in New York City will raise by about 10 cents, to about $4.10, according to Starbucks spokesman Jim Olson. However, he told Reuters that prices on about six other beverages will increase, as well.
This is the first widespread price increase made by Starbucks since 2007. However, the Seattle-based coffee brewing chain has been adjusting prices in some instances on a market-by-market basis over the years, Reuters reports.
Starbucks raised prices on some items on its menu in California and South Florida in November and will not be affected by this price increase, the company said.
According to Starbucks, the price increase is not a result of high coffee prices, but to offset higher milk and fuel prices, which contributes to pressure in distribution, store operations and commodities.
These adjustments are the result of balancing the cost of doing business with competitive dynamics in these markets, Olson told Reuters.
Starbucks' most recent price hikes went on without pushback from customers, Reuters reported, since many customers are considered high-income. However, customers in Oregon used food stamps to purchase coffee in an in-store Starbucks in a Safeway grocery store earlier this month.
Shares of Starbucks climbed by 2.2 percent to $47.04 on Tuesday following the announcement, according to NASDAQ. The company forecasted a 20 percent profit growth of $1.75 to $1.82 per share this year.
The international coffee giant is also testing plans to offer beer and wine in some stores, namely in Chaicago, to cater to the kind of customer who isn't a coffee drinker.