Starbucks raises prices

Anyone familiar with Starbucks (NASDAQ: SBUX) knows the company has incredible customer loyalty. Day after day, its stores are full of people willing to pay above-average prices for its coffee, lattes and the like. While a lot of factors have contributed to Starbucks' popularity, I believe the primary reason the company has been so successful is the fact that it's a lot more than a coffee shop. Consumers are provided with nice accommodations, wireless Internet access, relaxing music and so on. The Starbucks brand is so powerful that many people simply would not leave, even if the company raised its prices significantly.

It should come as no surprise, then, that Starbucks announced a price rise today in the face of rising commodity costs. According to the press report, Starbucks is going to increase its prices by nine cents per cup. This move comes just a month after the Starbucks CFO warned of missing guidance because of increasing milk costs. Interestingly, this is not the first time Starbucks has raised prices this year.

For long-term investors, I don't think the fact that the company might miss guidance this year really matters. The fact is, the company's economic moat is extraordinarily strong and consumers are going to continue flocking to Starbucks in years to come. At 27 times next year's earnings, the stock certainly isn't cheap, but if you're willing to hold on for the long haul, I doubt you'll be disappointed.

Gallery: SBUX around the world