Starbucks Corporation (NASDAQ: SBUX) unveiled its new menu program today that includes an expanded lineup of beverages and lunch selections. It looked all too familiar. Coffee and salad, I thought? Can't I get that at McDonald's Corporation (NYSE: MCD)? Before its foray into salads, Starbucks had aggressively been competing with McDonald's over the title of 'best coffee' ever since Canadian Business magazine's blind taste-test last year declared McDonald's the winner and champion.
Starbucks has already tried to compete for a spot in the crowded breakfast line-up. Back in October last year, they announced a plan to roll out its breakfast sandwiches. After a taste-test, The Columnist Manifesto thought them to be so bad that he compared them to airplane food.
With Starbucks' grinds slightly burnt, management decided to tackle McDonald's straight on: Salads. Customers now have the option to order the new Tomato Mozzarella Insalada, Champagne Pasta Salad or Albacore Tuna Penne, among other delights. Try that with your new Raspberry Mocha Frappuchino.
Starbucks seems terrified that people think McDonald's coffee is better than theirs. Their expansion into selling music CDs and DVDs show the company's desire to find new revenue outlets, but the expansion into breakfast and salads says that they're afraid of losing its customer base to Ronald McDonald. Even worse, Starbucks is forgetting what made them Starbucks: The coffeehouse experience and quality coffee.
At this rate, Starbucks is en route to be a part of the complete fast-food market, and will directly compete with McDonald's, Burger King Holdings, Inc. (NYSE: BKC), Wendy's International (NYSE: WEN) and all the others.
What should McDonald's think? George Yared, CIO of Yared Investment Research, actually believes that Starbucks will become the next McDonald's. Time will tell.











Reader Comments (Page 1 of 1)
6-26-2007 @ 5:52PM
Joe Smaha said...
Starbucks is entering a new realm of menu offerings and a lot of trouble. It takes entirely differently trained managers and in some instances crew to properly execute a quality varied menu offerings and deliver the same service that Starbucks delivered to their customer. They are caught with increased quality coffee competition from many sources and coupled with stores that are located too close together, and with increased rent and employee expense, they are going to be entering the restaurant market of higher food costs and higher waste costs. They should roll this expanded menu out very slowly as they need to gain not only valuable experience in the restaurant business, but also must hire, train and attempt to keep many more employees in a tough labor market.
6-26-2007 @ 9:30PM
Mr. noitall said...
"Fad" company Starbuck's better drop their prices if they want to become the next McDonald's. It's all over for "fad" company Starbuck's. Sell your stock, now!
8-02-2007 @ 1:59AM
Rod said...
www.ImABeanHead.com
All I can say is R & R Cafe in Redford Township, Michigan opened three months ago and all I can say is it may not be a big chain, but with the concept they have for gourmet sandwiches and Coffee in one place has the big dogs looking over and saying WoW! these guys have it all and why don't we. R & R coffee is better then the local McD's and Starbucks all day. I'm not sure what the roast is but I would travel out of my way for it.
9-17-2007 @ 4:43PM
chzyrider said...
Coffee drinkers do your share!! TAX COFFEE !! Why should smokers be targeted to pay for everything with taxes tacked on the product. Imagine the millions of dollars that can be available for health care or schools if .25 cents were added to every specialty coffee beverage that costs over $3 to begin with. Would you stop drinking coffee for an extra quarter? Probably not, therefore it's an unending supply of revenue for government services. Nobody wants you to quit, yet everybody wants smokers to quit, and thus losing that revenue intended by the tax that they were in favor of and depending on. It just don't make sense to tax an unfavorable diminishing use product, yet leave another potentially profitable one untouched.
9-17-2007 @ 4:52PM
chzyrider said...
McDonalds breakfast combos all include coffee (for your kids too) unless you wish to pay extra for a different beverage (milk or juice) for your child's breakfast, or if you yourself don't drink coffee. This is screwy for an establishment that targets kids. I refused my last order of 6 breakfast combos from McDonalds when they tried to charge extra for juice instead of the coffee included with the meals, and went somewhere else and have not ordered breakfast from McD's since.
10-09-2007 @ 1:12PM
Am said...
For the one who wants to be mad about juice costing extra with a breakfast, let me explain this to you. I am in the restaurant business and the cost for a cup of coffee is only a small fraction compared to a glass of any kind of juice or milk. That is probably why it cost more to get juice with your breakfast instead of the coffee, it is a very simple concept...