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.