Is Starbucks' Price Hike an Opportunity for Others?

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July 21 (Bloomberg) -- Joe Chief Financial Officer Caroline Barad discusses the impact that Starbuck’s price hike has on smaller coffee shops and chains. She speaks on “In The Loop.” (Source: Bloomberg)

Starbucks already raised prices in stores last month and starting today, the packaged coffee sold at u.s. grocery stores will go up an average of eight percent.

Joining me now is caroline barrad the cfo of joe.


What does this mean for your business when a huge chain raises their price?

We certainly understand why starbucks needs to raise their prices.

There have been huge changes in the market especially over the spring.

It's a great opportunity for people who are standing in line to pick their heads up and see what else is out there.

Many of our stores are near starbucks.

They can come over and try us.

It's a good opportunity.

Does that mean you will try to keep your prices lower?

We watch the prices of our contemporaries around the city closely.

We monitor them regularly to make sure our prices coming equal or lower.

Starbucks is raising prices because the cost of coffee has shot way up.

Obviously that will affect you guys as well.

Does that mean you are eating your margins?

We raised our prices slightly in april.

We are constantly watching our margins, very tight.

The coffee market fluctuates every day.

To get that at a consistent price to the end buyer is a constant challenge.

Because starbucks is so big, they are able to source out longtime down the road, maybe 18 months.

What's is that mean for you guys who are smaller?

We also source at least 12 months in advance.

That's just the way the market works.

The coffee plant takes 3-5 years to yield the fruit.

We are doing our contracts and negotiating six months out.

That's the way the market works.

How are you sourced right now?

We are just getting into our manual that will be out next fall.

We are just beginning and we're looking to buy for winter, 2015. what will you do with these high prices?

The coffee buyer watches the market obsessively.

While they are drinking coffee.

As soon as he sees a window, he can't one of our importers and we try to lock in a contract.

Our prices are set based on the benchmark which is the market in our prices are at differential above that we pay to the importers.

To say that the new york city coffee market is oversaturated might be an understatement.

You only have eight locations.

How do you compete when you have a lot of competition from small and big guys?

We are opening our temp location in september.

-- eric can't location in september.

-- our 10th location and september.

The quality of our milk and our customer service in the education our baristas possess, there is tons of ongoing classes.

We think overall, the taste is uniquely different than what you can buy in the city but also the experience is uniquely different.

We focus a lot on that.

Versus turning out a product rate you did not bring any with you.

We have to get some upstairs.

This text has been automatically generated. It may not be 100% accurate.


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