Nov 09, 2018 (China Knowledge) - If you have been to a Starbucks recently, you might have noticed that prices for some of its products have gone up.
For the first time in two and a half years, Starbucks has raised its prices in Mainland China, signaling that its aggressive expansion strategy may be running out of steam.
Prices for tall and grande cups of its Americano coffee have increased by RMB 1 to RMB 25 and RMB 28 respectively since November 6. In addition, voucher and club member discounts will be reduced starting from December 6. However, there is a silver lining in all of this, customers who bring their own cup can enjoy a higher discount of RMB 4 instead of the previous RMB 3.
Starbucks has been facing increasing competition in the Chinese market from local startup Luckin Coffee which provides group discounts and coffee delivery services. Furthermore, McDonald’s McCafe has also entered into the coffee delivery business starting last month in certain cities.
Sale of Starbucks in China has dropped by 2% in the third quarter compared to last year, marking its first decline in 9 years. After carefully evaluating its business from multiple perspectives such as rent, logistics and customer experience, the company has decided to raise its prices.
The company’s revenue in the Chinese market increased by 21% this year following the launch of new outlets and its delivery services. The company is currently partnering with Ele.me for the delivery of its coffees.
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