Question

What do you think about the way in which Starbucks versus Coffee Bean taxes customers on the purchase of coffee?

Answer 1

Why Coffee Bean doesn’t charge sales tax on to-go coffee, but Starbucks does… and they do, too!

Like everyone else, for years we’ve been baffled by the Coffee Bean vs. Starbucks sales tax paradox, where the much hipper CB asks “for here or to go,” but Starbucks does not. After a substantial amount of wasted time as well as asking the right people, the answer has finally arrived.

It’s not a sleazy, dishonest reason, either, like everyone thinks. At least not this time…

Nowadays in California (the home of Coffee Bean) if any food vendor makes 80% of their money from prepared food, and 80% of this food can be possibly consumed on their welcoming premises, they must charge sales tax on all consumable items, for here or to-go.

That means McDonald’s, too, and every other fast-food place that you thought was ripping you off all the time because Coffee Bean didn’t.

So what’s up with Coffee Bean? Why have they caused us to waste so much time the last few years getting pissed-off at everyone else?

Well, there is one exception for these 80% restaurants and fast food places. If they want to, the Board of Equalization will allow them to exempt food to-go items that are specifically hot beverages, cold food and bakery products. Coffee Bean takes advantage of this allowance, which is why they always ask you “for here or to go” but Starbucks does not. Starbucks opts to tax EVERYTHING, which is their right.

They don’t apply for the exemption because– for one thing- it’s easier on their books, and they also know that people always LIE to avoid sales tax and then hang around the place after they just said “to go.” So they include the sales tax within the sales price, and not surcharge it.

Remember, in California, all stores are required to charge sales tax on food items that are consumed on the premises. So that’s what Starbucks is doing– charging sales tax on everything. Unlike CB, they’re just hiding it. It’s not like they’re giving you a free ‘no-tax’ pass on inside food (they’d be breaking the law if they did!)

This time it’s not a general rip-off, it’s just the law. California requires sales tax on all prepared and readily consumable food at these 80% places. But if they want to, any of these companies can exempt the to-go hot coffee, rolls, drinks, etc. like Coffee Bean does. This of course gives you more money– to spend on Coffee Bean’s higher prices!!

though, that some people gripe that Coffee Bean “charges you to sit down inside…. !” because being cynical is always more fun than sounding in earnest, but it’s not. Starbucks hides their tax-everything policy, Coffee Bean does not, and that’s what’s been happening all these years.