This passage delivered a tragic piece of information—— Tim Hortons is going to rising it price due to the doubled price of its most basic raw material, the coffee bean.
Generally speaking, Tim Hortons is a conscientious merchant since it is almost the last to increasing price. If the present price cannot match up with the cost, rising in price seems as the only way to go. Starbucks and other competitors of Tim Hortons’ such as Keurig K-Cup and J.M. Smucker all have at least partly risen the price of some of their products.
Industries like café, whose selling price is highly related with raw materials while these materials’ annual price can alter dramatically every year will have to revise their financial report regularly. The aim to rise price is not to meet cost but to maximize the total profit. Nevertheless, once the upward ratio price leads to a greater downward proportion of consumption, the increasing of price is estimated to be a negative strategy.
There are other method to deal with this kind of situation. Reducing the price of other company products or branching out can be some ideas. If Tim Hortons rise the price of coffee but decrease the price of sandwich and invite some other products, less customer loss is forecasted to happen. Anyway, remover the burden caused by the rising of cost to the tolerance is never the best method.