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Starbucks joins the value menu wars with a new discounted offer

By Jordan Valinsky, CNN

New York (CNN) — Starbucks is the latest entrant in the value menu wars, joining its rivals in releasing new offers to lure back cash-strapped consumers.

The coffee chain rolled out Tuesday a new “Pairings Menu,” which combines a drink and a breakfast item for a discount, marking Starbucks’ latest attempt to rev up spending after a disappointing quarter and entice customers worried about soaring fast food prices.

The offer, available all day, comes in two options: For $5, a customer can order a tall iced or hot coffee or an iced or hot tea paired with a croissant. The second choice costs $6, which also includes the option of the drinks plus any breakfast sandwich. Prices will rise if alterations are made, including ordering a larger drink or customizing the food.

Starbucks joins Wendy’s, McDonald’s and other fast food chains in rolling out discounts to bring back customers shying away especially low-income consumers who are dining out less often and spending less when they do.

There’s been an “almost overnight pivot to value from some of the largest limited service chains as consumer visits have softened significantly and traffic has essentially flattened over the past several months,” David Henkes, a senior principal at Technomic, a food industry research and consulting firm, told CNN.

For Starbucks, it’s part of broader changes rolling out this summer, which include a new iced coffee blend, updated its app with more accurate ordering times and new promotions. Last quarter, same-store US sales fell 3%, prompting CEO Laxman Narasimhan to call his company’s results “disappointing” in a candid earnings call.

The new promotion is notable for Starbucks, “which has in many ways been a symbol of affordable indulgence, that they feel their affordability has softened to the degree that they need to use deals to drive traffic,” Henkes said.

Starbucks is also making tweaks to its two-year-old partnership with Delta Air Lines’ SkyMiles program, which lets customers earn miles on every transaction. Beginning Wednesday, customers will only earn miles on Starbucks account reloads of $25 or more rather than per dollar spent at its cafes.

–CNN’s Danielle Wiener-Bronner contributed to this report.

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