Starbucks Pricing in China

The Wall Street Journal has a story on Starbuck and latte pricing in China.  Basically, Chinese customers feel that the price is too high.  Unfortunately, the article linked above does not have the price breakdown graphic that was in the print edition, so I will put that information here.

Other Operating Expenses = 0.23
Equipment Costs = 0.17
Tax = 0.24
General & Administrative = 0.28
Labor = 0.41
Raw Materials = 0.64
Store Operating Expenses = 0.72
Rent = 1.25
Profit = 0.85
Price = 4.80 (does not add up to 4.79 due to rounding)

So given the information above, we can see that Starbucks has market power in that they are able to charge a price above their marginal costs.  Some of the costs above are fixed (Rent, General & Administrative are two good examples) and some are variable costs (Raw Materials, Tax are two good examples).  Thus since the price is greater than marginal cost, this product is profitable to Starbucks.