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KNCCO discloses the result of its analysis of Coffee Bean’s price hike
Consumers should take joint action against coffee franchises’ arbitrary price increases |
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#701 Seoul YWCA 20, Myeong-dong 11-gil, Jung-gu, Seoul, Korea
TEL.: 82-2-774-4050/FAX: 82-2-774-4090
KNCCO discloses the result of its analysis of Coffee Bean’s price hike
Consumers should take joint action against coffee franchises’ arbitrary price increases
On August 1, 2014, Coffee Bean Korea (Coffee Bean) raised the prices of all of the beverages served at its stores by 200-300 won (i.e., from 4,300 won to 4,500 for a Small Americano and from 4,800 won to 5,000 won for a Small Caffe Latte). The business pointed to a rise in building rent and labor expense for its price hike.
The Price Monitoring Center of KNCCO (President: Lee Deok-seung) had pointed out that Starbucks Korea’s price hike for some items last month lacked any reasonable basis and warned against other coffee franchises following suit.
According to Coffee Bean, its total building rent and labor expense rose by 2.7 billion won and 0.5 billion won, respectively, in 2013. However, it is judged that in terms of the sales ratio, labor expenses fell by 0.5%p and raw material expense[1], etc. also fell by 1.6%p, while building rent rose by 1.0%p. Overall, the sales cost ratio fell from 43.9% to 42.0% and the operating profit margin soared from 3.8% to 6.3% in 2013, thus showing that the price hike is groundless[2].
Coffee franchises have raised prices every two years and have given reasons that consumers cannot understand. These price hikes have increased the consumers’ burden. As for Starbucks and Coffee Bean, they raised prices for their Americano and Caffe Latte (Tall/Small) by 300 won in in May and July, respectively, in 2012 and by 200 won in July and August, respectively, in 2014.
Considering their past action patterns, it is feared that other some time in the first half of next year other coffee franchises may follow suit. We at KNCCO are issuing a warning that we will consider taking a strong group action against such price hikes.
[Table 1. Income-loss statement of Coffee Bean Korea]
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Selling and general administrative expenses 2)
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Notes: 1) Sales cost includes raw material cost, labor expenses, building rent, depreciation costs, administrative expenses, utility expenses, etc.
2) Selling and general administrative expenses include labor expenses, building rent, depreciation costs, sales promotion expenses, utility expenses, consumable expenses, repair expenses, traveling expenses, intangible asset depreciation costs, education/training expenses, etc.
-----------------------------Partners of Korea National Council of Consumer Organizations------------------------------
National YMCA of Korea, Green Consumers Network in Korea, Korea Federation of Housewives Clubs, National Council of Homemakers Classes, Korea Consumer Education Center, National Council of YMCAs of Korea, Consumers Union of Korea, Consumer Affairs Institute, Citizens Alliance for Consumer Protection of Korea
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