Thursday, January 10, 2008

Can McDonalds beat Starbucks?

In a recent survey in the US consumers have voted new McDonalds coffee blends as being superior to competitors such as Dunkin' Donuts and even Starbucks whose coffee is generally thought to be the markets best.

This coincides with the news that McDonalds intends on installing coffee bars with baristas in many of its fast food outlets in an attempt to take a share of the premium coffee market dominated by Seattle based Starbucks, "We're competing for customers wherever they may be - not from any one brand. If customers are looking for coffee, we want ours to be the best value and the most convenient.". I am not sure that a McDonalds coffee bar has a particularly great chance of success in this market, and the main reason is that the offering just isn't consistent with what McDonalds is. McDonalds is... Big Macs, Happy meals, free toys, fast food, burgers, fries... not mochas and lattes. Starbucks on the otherhand is THE coffee shop, the first brand to have found the correct mix of ingredients both tangible and intangible that lead to premium coffee becoming mainstream.

Although Starbucks have experienced a large slowdown in growth in the last year it doesn't mean that just entering the market will ensure success, some brands due to what they have become are almost incapable of entering certain markets, would you buy a Skoda car that was billed as "luxurious" and cost €200,000? Probably not.
With Howard Schultz back at the reins of Starbucks and a refocusing on the "Starbucks experience" in progress entry to the market will be at best very challenging.

McDonalds premium coffee? I cant see it going far...


jedimasterbooboo said...

Darn McDonalds...I don't like going there, but I know I'll end up there if they're doing this. If I didn't I'd probably never step foot in there. I like the food, but it's crap and they need to do more for the world than they have in my opinion, so I feel guilty.

jedimasterbooboo said...

oops..."if I didn't HAVE KIDS" is what I meant to say... don't know what happened there a whole sentence disappeared.

Gavin Jackson said...

you should buy SBUX stock now. hella cheap. yes mcdonalds is good in a pinch but starbucks is a strong brand and it will get through it all.