Starbucks Corp has planned to raise prices of its menu this year and diminish its expenditure in order to balance the rising costs of goods and labour, according to Reuters. This comes amid the surge in COVID-19 cases that led the coffee house giant to lower profit estimates in 2022. 

The firm failed to accomplish its sales and quarterly profits due to restrictions and delayed office reopening during the omicron spread. 

Reuters reported that shares dropped slightly in extended trading, after a steep 16% drop just last month. 

The pandemic has resulted in inflation, with restaurant chains compelled to pay higher costs for food items, transportations, and wages during shortage of manpower. 

Outlet openings were delayed in China due to the restrictions. The country is a booming market for Starbucks.

Starbucks reported 72 cents per share of profits, missing out on Wall Street estimates of 80 cents, according to Reuters.

 This led the company to review and revise its expected profits forecast from 10% to 8-10% this year. 

The coffee chain has paid extensively in employee training and Covid-19 isolation. Although, its employees have been seeking a union in the United States.

According to Reuters, Kevin Johnson, Chief Executive Officer on a call with investors stated, “when the Omicron surge began, inflationary costs and staffing shortages were amplified, well in excess of our expectations.”  

Johnson also added that after increasing menu prices in October and January, Starbucks aims to hike prices again in 2020 and will cut expenditure on marketing and promotion. 

The company is yet to specify which products will receive a hike.  

 In China, movement has been restricted ahead of the Beijing Olympics to curb the sudden contagion of Covid-19,  leading to a fall in Starbucks sales. The chain also recently received backlash after a report stated two of its stores using expired ingredients.