Think Twice Before Starbucks Lures You Back


Starbucks quickly discovered that when the economy went south, customers weren't as hooked on lattes as its executives had assumed.

Starbucks' sales at U.S. stores open at least a year fell 10% and net income dropped 69% during the latest fiscal quarter. In response, the company (Stock Quote: SBUX) announced plans to close an additional 300 retail outlets and eliminate up to 6,700 jobs.

The dismal results convinced Starbucks that its coffee alone was no longer enough to get people to hand over $4 a visit. So the company is starting to sell value meals (or "breakfast pairings," as Starbucks likes to call them) beginning in March.

Starbucks will sell two types of value meals. Each costs $3.95. One offers a tall, drip coffee with one of four hot sandwiches. The other is a latte with a bowl of oatmeal or a piece of cinnamon swirl coffee cake. The meal combos will save the customer an average of about $1.20 if the items were purchased separately.

While Starbucks is trying to lure you back, think twice. Here's why.

$4 is still $4: While you'll be getting a little more than you have in the past, it's still $4 out of your pocket. A daily habit means $20 a week, $80 a month and more than $1,000 a year. Add some interest that money could earn as an investment and multiply by a few years, and you could have the beginning of a nice nest egg.

Opportunity cost: While the money could go toward savings, it could also be spent on products that will save you money in the long run.

If you don't need it: A basic rule is to only buy things you need. A Starbucks coffee with a bit of food is probably not one of the better meal values. Starbucks wants you to focus on the fact that it's a better deal than before, but you should really consider whether it's a good deal compared with other options.

It's easier to stay free than to wean yourself again: If you managed to wean yourself from a daily Starbucks drink in the past, it probably wasn't all that pleasant. While Starbucks hopes a value meal will get you in the door, it's a lot easier to continue with changes you've made in your coffee-drinking habits than to go back and get hooked again.

It's a ploy and nothing else: Starbucks CEO Howard Schultz once vowed he would never offer value meals. The company doesn't really want to sell these, but it's being forced to because of current economic conditions. Nothing new is being added. Starbucks is simply mixing current items and offering a discount.

Starbucks isn't stopping with value-meal combos. The company is introducing instant coffee, which it claims has taken 20 years to create, for about $1 a cup. Look beyond the price and consider whether it's a value you feel is worth spending your hard-earned money on.




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