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Starbucks is introducing location-based pricing at some stores nationwide

This new pricing strategy is part of Starbucks' efforts to adjust to varying market conditions and maintain the sustainability of its stores.

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Starbucks is set to introduce a "location-based pricing" system in Japan at some of its stores nationwide, starting on February 15, 2025. This means that prices will vary depending on the location of the store.

Out of around 2,000 Starbucks locations in Japan, roughly 30% will be impacted by this new pricing strategy. This includes stores situated in airports, service areas, and major urban centers like Tokyo, Osaka, and Fukuoka.

The company stated that this initiative is focused on "sustainable store management." Starbucks has thoroughly evaluated store locations and their business conditions to inform the new pricing structure.

Pricing Categories:

Type A Stores: These include stores in airports and service areas of expressways. Prices at these locations will increase by an average of about 6%.

Type B Stores: These include stores in Tokyo's 23 wards, parts of Osaka, Fukuoka, and other major cities. Prices at these locations will rise by about 4% on average.

Prices will stay the same at approximately 70% of the stores that are not affected.

For instance, a tall-size cup of drip coffee, which is currently priced at ¥420 (approximately $3.67) including tax, will be priced at ¥445 in Type A stores and ¥440 in Type B stores.

Starbucks is often perceived as a high-priced coffee shop compared to local chains. This perception has been a barrier, although the company has worked to establish itself as a premium brand.

Japan has a deeply rooted coffee culture with established domestic coffee chains like Doutor Coffee and Tully's Coffee. Competing in such a saturated market has been challenging.

Starbucks has had to adapt to the unique preferences and customs of Japanese consumers. For example, non-sweet drinks are often preferred in Japan, so Starbucks has developed products to meet these needs.

Starbucks faces pressure to maintain sustainable practices and address social responsibility issues. This includes sourcing ethically produced coffee and reducing its environmental footprint.

Location-based pricing has also been introduced by other restaurant chains to maximize profits.

McDonald's has also adopted location-based pricing in various regions. Prices can vary depending on the location of the restaurant, with higher prices often found in urban areas and lower prices in suburban or rural locations.

Yoshinoya, a popular Japanese fast-food chain known for its beef bowls, has implemented location-based pricing. Prices for menu items can differ based on the restaurant's location, with higher prices typically found in areas with higher living costs.

Coco Ichibanya, a well-known curry restaurant chain in Japan, uses location-based pricing to adjust its menu prices based on the restaurant's location. This allows the chain to account for differences in operating costs and local market conditions.

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