Starbucks has made it routine for people to pay more than $6 for a medium espresso-based drink. My daily go-to: a grande iced horchata shaken espresso costs $6.45.
I actually live closer to a 7-Eleven where coffee drinks cost roughly half as much. A large (30-ounce) flavored latte from the convenience store chain costs $2.29.
Prices vary by location for both chains, but 7-Eleven clearly has much cheaper coffee compared to Starbucks. Yet millions of people make the same choice I make each day and opt to pay more for essentially the same product.
RTM Nexus CEO Dominick Miserandino explained why consumers are willing to do that.
“People aren’t paying twice as much at Starbucks because the coffee is twice as good. The decision is emotional as much as economic. Starbucks represents a small reward, a familiar ritual, and even a bit of identity. That feeling can outweigh the dollar signs, while 7-Eleven is still largely viewed as a convenient place to grab coffee,” he told TheStreet.
Now, 7-Eleven, which recently upgraded its pizza crust as part of a broader effort to improve its food offering, has rolled out a new seasonal coffee lineup. The new products include the chain’s take on a Starbucks classic as the chain looks to leverage lower prices on lookalike items to win business.
7-Eleven adds new seasonal coffee
Starbucks has made the Pumpkin Spice Latte a fall seasonal classic. 7-Eleven has answered that with its own pumpkin-based limited-time coffee lineup.
“Coffee lovers can enjoy pumpkin coffee in every form this fall at 7-Eleven. The hot Pumpkin Cappuccino blends pumpkin and warm fall flavors with a smooth, creamy finish, while the Pumpkin Brulee iced cold brew latte brings those signature seasonal notes over ice for a refreshing autumn pick-me-up,” the company shared in a press release.
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The chain also has a partnership with Tom Hanks and his Hanks For Our Troops brand, which donates its proceeds to support veterans.
“For that classic fall taste, customers can try Hanks Pumpkin Brulee Coffee, a hot offering that pairs pumpkin with a hint of toasted vanilla for a subtly sweet finish. For a more nostalgic flavor, fall fans can also try out the brand’s Chocolate Turtle coffee at home by purchasing Hanks coffee pods or new 12-ounce ground coffee bags, available only at participating 7-Eleven locations,” the company shared.
7-Eleven has invested in coffee
“Value in a cup of coffee is subjective, but 7-Eleven’s consistent quality comes from their ‘bean-to-cup’ transition. Many locations have upgraded their hardware to machines that store whole beans and grind them seconds before the water passes through, which is vastly superior to older models that held pre-ground coffee in a warm carafe for hours,” Chef’s Resource reported.
That site also offered some tips for consumers on how to get the best cup of joe at 7-Eleven.
- Always look for the “freshly ground” indicator lights on the machine.
- Avoid the bottom of a carafe if the pot has been sitting for more than 30 minutes.
- Use the provided lids to maintain temperature, as the paper cups lose heat quickly
- If you prefer iced coffee, fill the cup with ice after filling it with coffee from the refrigerated iced coffee dispenser, or use the “Iced Coffee” setting on the machine to ensure the strength remains balanced.
C-Store Dive took a closer look at the changes 7-Eleven made to its coffee program.
“Whereas the company’s old coffee program focused on bulk dispensers with one or two specialty machines, the new setup includes new bean-to-cup coffee machines, specialty machines, and iced coffee options along with numerous flavorings to help shoppers personalize their drinks,” the site reported.
Starbucks
Starbucks isn’t just selling coffee
Starbucks CEO Brian Niccol has tried to reestablish the chain as a “third place,” after home and office, with his “Back to Starbucks” turnaround campaign. He thinks his company is offering more than coffee, and he defended its price point.
“What we’re seeing is people, you know, they want to have a special experience, and regardless of what your income level is, in some cases, a $9 experience does feel like you’re splurging,” Niccol told The Wall Street Journal’s “What’s News AM” podcast.
Niccol thinks that the experience justifies the price tag.
“And then, what that means is we have to make it worthwhile, right? And then in other cases, people believe, ‘Well, this is a really affordable premium experience.’ Because they’re saying, like, ‘Well, it’s less than $10, and I get a really premium experience,’” he added.
Consumer Edge Analyst Michael Gunther also sees a trend that benefits Starbucks.
“Consumers may be shifting dining dollars toward in-home eating but are leaving room in the budget for daily drink habits,” he told Reuters.
He expanded on that idea with comments he made to Fintech.TV, which the company shared on its LinkedIn page.
“If people are feeling a little constrained and they’re looking to make sure that their dollar stretches further, maybe they’re cutting back in some places, but they’re still paying for the $7-$8 coffee.”
7-Eleven could change your finances
It’s a tired personal-finance trope to talk about people saving money by dropping their daily Starbucks habit. 7-Eleven’s improved coffee, however, allows consumers to save money while still buying coffee outside the home.
That could have a significant impact on your finances over time.
“For example, if you cut out your daily latte, you could save over $150 a month. The same goes for the mid-day energy drink pick-me-up; that afternoon ritual will cost you over $100 a month,” Steve Repak wrote for the CFP Board of Standards.
An all-or-nothing approach, he noted, likely ends up in failure. Instead, he suggested moderation. He recommends an approach that would mirror simply shifting to a cheaper coffee from 7-Eleven.
“Instead of purchasing both drinks every day, what if you decided to alternate one per day? You can save roughly $125 a month and still get to enjoy both of those drinks,” he wrote.
If you invested $125 a month for 30 years and earned an average 7% annual return, you’d contribute $45,000 and have roughly $152,500.
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