Starbucks enters the price-cutting contest with a new discounted promotion.
Yesterday, Starbucks introduced a new "Pairings Menu" that combines a drink and a breakfast item at a reduced price. This is meant to boost spending following a discouraging financial quarter and attract customers who have become concerned about rising fast food expenses.
The deal is available throughout the day and offers two options. For $5, you can order a small hot or iced coffee or tea alongside a croissant. An alternative option, costing $6, involves pairing any beverage with a breakfast sandwich. If you choose to modify the size of the drink or customize your food, the price will increase.
This new initiative joining Wendy's, McDonald's, and other fast-food chains as they introduce discounts to lure in customers, especially those from lower-income backgrounds who are eating out less frequently and spending less money.
According to David Henkes, a senior principal at Technomic - a food industry research and consulting firm - "There's been an almost overnight pivot to value from some of the largest limited service chains as consumer visits have softened significantly and traffic has essentially flattened over the past several months."
To counter this, Starbucks is also implementing various changes this summer, which includes launching a new iced coffee blend, an upgrade to their app that provides more accurate ordering times, and new promotions. In the last quarter, US same-store sales declined by 3%, prompting CEO Laxman Narasimhan to characterize their results as "disappointing" during a frank earnings conference.
The introduction of this deal is notable for Starbucks, he explained, as it has been perceived as a symbol of reasonably pricey indulgence - "that they feel their affordability has softened to the extent that they need to use offers to drive traffic."
Additionally, Starbucks is making adjustments to its partnership with Delta Air Lines' SkyMiles program. Starting tomorrow, customers will only earn miles when reloading their Starbucks accounts with $25 or more, rather than being rewarded on a per-dollar basis spent within their cafes.
–CNN's Danielle Wiener-Bronner contributed to this story.
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This new "Pairings Menu" from Starbucks aims to appeal to customers worried about rising fast food expenses, offering a reduced price for combining a drink and a breakfast item. With this offer, Starbucks joins other fast-food chains in introducing discounts to attract customers, particularly those from lower-income backgrounds who are eating out less frequently.
