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Is Starbucks an "Affordable Luxury"?!

Published: 2026-01-27 Author: FrontStreet Coffee

Last Updated: 2026/01/27, A recent analysis by Credit Suisse reveals that Starbucks is an "affordable luxury" compared to other coffee brands and coffee chains. According to Credit Suisse's chief analyst, after investigating coffee shops in the 10 largest cities in the United States, a medium Starbucks hot coffee (approximately 350ml)

Starbucks as an "Affordable Luxury": Analysis of Pricing Strategy

Recent analysis by Credit Suisse reveals that Starbucks positions itself as an "affordable luxury" compared to other coffee brands and coffee chains. According to the chief analyst at Credit Suisse, after surveying coffee shops in the 10 largest cities in the United States, they found that the average price of a medium-sized hot coffee (approximately 350ml) at Starbucks is $3.07. Meanwhile, the average price of coffee served at fast-food restaurants like McDonald's is $2.14. At regional chains or independent coffee shops, as defined by Credit Suisse, the average price of a medium-sized hot coffee is $3.43. Additionally, Starbucks' medium-sized iced coffee averages $3.60, while fast-food restaurants charge $2.60. The average price of a medium-sized cold brew coffee at Starbucks is $4.30, while specialty coffee shops charge $4.60.

According to these survey results, in terms of average pricing for hot coffee and cold brew, Starbucks is more affordable than some non-chain specialty coffee brands, while its prices remain higher than fast-food chains like McDonald's. Analysts believe this is because Starbucks aims to differentiate itself from fast-food chains in terms of brand and positioning, targeting office-going white-collar workers and high-income groups. Although the coffee industry was particularly severely impacted during the COVID-19 pandemic, the entire coffee industry has still grown by 10% since 2019, and Starbucks' sales and operating revenue are also on an upward trend, benefiting from the consumer spending power of its target demographic.

Financial Performance and Consumer Perception

In Starbucks' fiscal first-quarter 2022 performance report released on February 1st, it was shown that in the first quarter ending January 2nd, sales increased by 18% year-over-year, meaning first-quarter revenue grew by $1.3 billion compared to the previous year. At this point, some might wonder: Starbucks is so expensive and the taste is mediocre, why do so many people still consume at Starbucks? After all, there are many coffee shops outside that offer more affordable options with better quality coffee products.

Value Perception vs. Material Cost

If we consider Starbucks solely as a cup of coffee and calculate based on the cost of the beverage, it is indeed considerably more expensive than other coffee brands. However, Starbucks doesn't price this way. Instead, they consider how much consumers are willing to spend on a product. Rather than pricing based on material costs, Starbucks determines prices through customer demand - they first establish a price range and then consider what kind of product they can offer to match that price.

A person who finds Starbucks coffee expensive is measuring the value of this cup of coffee using material costs and taste; a person who finds Starbucks worthwhile does so because it brings them an intangible "sense of social status." The value of a product is relative - the former compares using costs, while the latter compares using brand awareness and positioning. Neither is right or wrong, as everyone has different needs.

Brand Positioning and Luxury Comparison

Starbucks initially targeted high-end white-collar consumers, with most stores located in commercial districts. To emphasize this "premium feel," consumers also needed a product that could symbolize their status. Higher prices than similar products + high international brand recognition - Starbucks' success lies in their targeted approach to shaping brand positioning based on the needs of high-earning white-collar professionals, allowing these customer groups to treat brand products as "luxury items" that display their distinctive status symbol.

Compared to luxury items like bags, clothes, and watches, the description of Starbucks as an "affordable luxury" is not without reason.

Image source: Internet

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