| I think that Starbucks and similar multi national franchises that consider themselves to be `Up Market' can charge what they want for products because of their market position, and the fact that so many people continue to go there.
Starbucks is overpriced, there is no doubt. The food cost for the coffee itself is around US15 cents, the milk around 15 - 30 cents (depending on the type and size of the coffee) and the paper cost (cup, lid, holder) would come to about 35 cents (yes - the packaging costs more than the food!) - gives a total of say 80 cents tops, then they charge $3 or $4. Thats a good business. Although the price is high, obviously the price is not too high, because people keep going back there for coffee. Go to any Starbucks and see the number of people inside - that will show you that the price is not too high. The factor that does contribute to their high pricing is their high overheads. To deliver you a hot cup of coffee in the right location (convenient to you) means they pay a premium for the rent (to get the best loaction possible). Plus they have quality equipment, well trained staff (well, most of the time), a big head office etc etc - all the things you don't have in a small cafe or tea house that increase the operating cost. As for China, as John said, there is not much competetion but a lot of people. With the new found wealth of a lot of people and a growing middle class, their is an increasing disposable income which allows people to do things they (and previous generations) may not have previously had the chance to do. Some of those things are to emulate what is seen from the west, and as many movies/TV shows show people meeting in and visiting Starbucks - that is adopted as part of the western culture. So I think that for many people in China and other parts of the world, Starbucks is a status symbol of a young, wealthy generation. |
Pudong Starbucks is Nice