A caffeine high 

Starbucks raises prices because of cost of doing business in Whistler

 

By Clare Ogilvie

To grab a java at WhistlerÕs Starbucks stores is going to cost you more from now on.

The U.S. coffee giant, which has declared record sales this year and last, is putting up the price of its bevies because it says itÕs expensive to do business in North AmericaÕs No. 1 ski resort.

ÒAfter analyzing the higher cost of doing business in Whistler, we adjusted our beverage prices in our Whistler locations,Ó said a statement released by the corporation after inquires by Pique Newsmagazine .

Starbucks declined to give interviews on the topic or explain why it was decided to raise coffee drink prices by an average of 27 cents.

There are two Starbucks locations in the Whistler Village and a third at Creekside. The Creekside location has yet to determine if it will raise its prices. That store, one of 9,000 Starbucks worldwide, struck its own rental agreement with Intrawest, Whistler-BlackcombÕs parent company, when Intrawest developed FranzÕs Trail at Creekside.

The corporation could not say whether the prices of its beverages were less in areas where the costs are less. Nor would they reveal any details of the Whistler rental agreements for their locations.

ÒI donÕt see any reason why Starbucks should raise its prices,Ó said Whistler resident Nancy Saver as she strolled near a Starbucks location this week. ÒI do think it is really tough to make a business work here, but if local coffee shops are making it you would think a large corporation could afford it.Ó

The high cost of doing business in town has been a hot topic recently. Saver was saddened that local music and book store Bestsellers recently closed its door after on going rent increases began to take too big a bite out of the small profit margin.

Chris Quinlan, owner of Behind the Grind coffee shop, sees the move as nothing but corporate greed.

ÒItÕs just corporate gouging,Ó he said. ÒYou canÕt tell me it is not.Ó

However, Quinlan agrees that affordability is a big issue for Whistler businesses, with fears that landlords will start to raise rents as the 2010 Winter Games approach.

ÒI am concerned that some landlords wonÕt see that it is not an opportunity to gouge, because that is short-sighted. Businesses are working very diligently with the (Whistler Chamber of Commerce) and the 2010 people to get that message out there.Ó

Last month the Chamber, which is working on a landlord-tenant task force, did a survey of its members and the number one issue threatening the future growth and profitability was housing and affordability.

ÒI donÕt feel comfortable commenting on an individual business but from a Chamber perspective we are concerned about the cost of doing business in Whistler,Ó said Chamber president John Nadeau.

ÒBut the fact is it is a free market rent situation and there are two million people coming here every year.Ó

There are a number of formulas used by local and out of town landlords to set rental prices, but all reflect the fact that Whistler is an international destination resort. Some landlords have come under fire from tenants for making it difficult for small local businesses to stay afloat.

But Jonathan Lazar, of Larco, a Vancouver based company which looks after several Whistler rental properties, including one of the Whistler Village Starbucks locations, said the organization does try to keep a mix of businesses going in its locations.

ÒWe try to maintain a healthy mix of national and local retailers,Ó he said by e-mail.

ÒWe try to find uses that are complementary to each other and try not to have too many similar uses, thus offering the shopper a wide variety of products and services from which to choose in the Whistler Village Centre.Ó

Lazar said agreements with renters such as Starbucks are private and he would not disclose the deals. He did say the rents are based on: ÒA combination of market forces (adjusted rates for competitive space in the Whistler market) and what a tenant is prepared to pay.Ó

The Olympic Games will play a role in rents only as much as they influence market forces and affect what a renter is willing to pay, said Lazar.

ÒAlso, bear in mind that the Olympics are a 17-day event while our leases are typically for five years,Ó he added.

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