McDonald’s Takes Down Starbucks


McDonald’s is reportedly trying to take down Starbucks by enhancing “coffee-driven visits,” a document which reveals the company’s 2014 to 2016 United States strategy. After the news broke that researcher IBISWorld Incorporation estimated that the coffee and snack-shop sales are going to outclass those of fast-food chains in the United States, the biggest restaurant chain in the world is claiming a piece of the coffee market and Starbucks’ place in customers’ preference, especially since this country is the world’s biggest coffee consumer with an average of three cups a day per person, the National Coffee Association said.

McDonald’s is quietly trying to take down Starbucks with its specialty coffee to go with the McMuffin, but its advantage is that the chain does not necessarily have to change its mission in order to convince coffee lovers to alter their habits. Instead, all it has to do is convince the fast-food consumers to accept a coffee next to the menu.

Nowadays, McDonald’s executives of the United States division are”plotting” a new plan for the chain, namely to enforce “a gold-standard cup of coffee with every visit.” Moreover, a webcast that addressed restaurant owners of this chain put Starbucks in the middle of its target and decided to attract the competition’s envy. However, the world’s biggest restaurant chain’s sales figures are not showing any improvement and its fourth quarter has registered a fall of 1.4 percent. Although in the United States 83 percent of adults drink coffee, a Goldman Sachs research report conducted recently showed that the under 35-demographic prefers Starbucks to McDonald’s.

Howard Penney, managing director at Hedgeye Risk Management LLC, is certain that the restaurant chain “is trying to look and feel more like Starbucks,” but he also mentions that the act of copying is hardly doing McDonald’s any good, because its specialty is food, not coffee, and making specialty coffee could slow down service.

The McCafe Rebranding

McCafe was established five years ago in the United States, but the plans did not necessarily coincide with the outcome. The initial idea was to turn this division into an experience which offers quality coffee and free Wi-Fi, but the specialty coffee is still owned by Starbucks. While McDonald’s registered a 10 percent growth last year, Starbucks’ 46 percent boost proved that the restaurant chain must instill the idea of coffee  in a fast-food-type restaurant.

Lisa McComb, a spokesperson for the chain, puts emphasis on the restaurant experience and adds the fact that including “exceptional” coffee to its food menu is a top priority.

Although McCafe is now only a sign over the espresso machine, as Penney mentioned, McDonald’s image is said to be in a constant change marked by the debut of specialty coffee like peppermint mocha, pumpkin-spice latte and the new chocolate-covered strawberry frappe, which give a clear hint that the chain is trying to take down Starbucks. Moreover, the restaurant chain’s hot-beverage cups now feature slogans like “Good Days Start Here” and also pushes forward its packaged ground.

McDonald’s CEO Donald Thompson mentioned last year during a Bloomberg event that “coffee is an impulse purchase largely so we want to make sure we can capture that traffic.” Even if Starbuck has been promoting its elite experience, McDonald’s is trying to take it down and prove that food tastes better when served with a good coffee.

By Gabriela Motroc


The Motley Fool
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