McDonald's Corp. (NYSE: MCD) and Starbucks Corp. (NASDAQ: SBUX) have been trying to cut into each other's businesses for a while now, with McDonald's introducing premium coffee and Starbucks its breakfast sandwiches. After test-marketing iced coffee and cappuccinos in various markets, McDonald's is ready to take its rivalry with Starbucks to the next level by rolling out a makeover of all its U.S. restaurants by 2009 to feature specialty beverages such as coffee drinks, smoothies, energy drinks, and other bottled beverages.
Specialty drinks have higher profit margins than sandwiches, and McDonald's estimates this "Made for You" campaign could boost sales by as much as $1 billion a year. Results from test markets in which the plan has already been tried suggest that it doesn't require additional staff and that it doesn't slow down service, but counters and drive-thru areas do have to be remodeled to make room for new equipment. Some franchisees are concerned about the costs of such renovations.
This has to be better news for McDonald's investors and watchers than Moody's downgrade of McDonald's last week due in part to competition and labor and energy costs. Shares fell 54 cents, or 1.1 percent, to $54.26 after the Moody's announcement, but closed Sept. 28 at $54.47. On the other hand, a Goldman Sachs analyst has McDonald's as a top pick in the otherwise mixed restaurant sector, for its global strength. Starbucks was downgraded last week as well.











Reader Comments (Page 1 of 7)
9-30-2007 @ 9:37PM
Satya Gabriel said...
While I think Starbucks is overvalued, I do not believe McDonalds represents any significant threat to Starbucks business. The reason people go into Starbucks (and buy its products) is ambiance, not convenience. These are not really the same people who frequent McDonalds. However, the strategy could still generate significant increased cash flow for McDonalds, whether or not it is at the expense of Starbucks.
10-06-2007 @ 10:29AM
BOB BRRYDEN said...
IF YOUR EATING AT McDONALD'S YOUR NEXT STOP SHOULD BE YOUR MONAVIE BOTTLE!!
http://www.mymonavie.com/BobBryden
10-06-2007 @ 7:11AM
butch said...
mac d needs to sell a lunch steak sandwish on french btrak and fried chicken in a basket and they will be un stopable
10-06-2007 @ 7:34AM
pat said...
I go to McDonalds for one thing only and that's when I have a craving for a big mac. I could care less what other stuff they add onto their menu.
10-06-2007 @ 7:35AM
alice said...
when are they going to add a veggie or soy burger for those of us who wont eat any form of meat???
10-06-2007 @ 7:40AM
Lois Nickell said...
McDonalds food is killing all the uninformed people in this country. WATCH the vido SUPERSIZE ME, then if you want to die slowly EAT UP!!!!
10-06-2007 @ 7:41AM
Jules said...
When will people realize that the money that they waste DAILY on this crap is not only killing them but making them broke too? All of this stuff is great once in a while, but was never meant to be a daily indulgence. WAKE UP!! Corporate America thinks you're lazy, stupid and as easily led like cattle.
10-06-2007 @ 7:41AM
Bill said...
Sorry Lois, anybody that doesn't know by now that McDonalds (or any other fast food) isn't health food deserves their hardened arteries...
10-06-2007 @ 7:45AM
Michael said...
Its a 'long story' but, the corporate 'honchos' at Starbucks were not very cooperative at one time, so, I guess Starbucks will get what it deserves, in the end...............
10-06-2007 @ 7:48AM
Debra said...
Would be nice if McD goes and gets smothies...and the people who go to Strarbucks...if you can aford them you don't have to worry about prices.
In God's Love
10-06-2007 @ 7:56AM
DarkRabbit said...
McDonald's offers some healthy alternatives like grilled chicken, salads, apples instead of fries. I think they are listening and don't want to lose
profits because of a new health conscious public.
Starbuck's offers s ome pretty unhealthy food choices themselves, liek cheese cake, criossants.
10-06-2007 @ 7:54AM
Ken C. said...
McDonald's??
That some people actually feed this garbage to their own children just boggles the mind.
I wouldn't eat that monkey chow if you held a gun to my head.
10-06-2007 @ 7:56AM
JGJB24 said...
THIS IS WHAT IS MAKING EVERYBODY FAT AND LAZY. FAST FOOD IS THE REAL CULPRIT THAT IS KILLING THE AMERICAN PEOPLE!!!!!!!!!!!!
10-06-2007 @ 7:57AM
Gary said...
I agree with Satya. The Starbucks and McD's demographic couldn't be more different, with the exception of the 10 or 15% that may frequent both.
10-12-2007 @ 8:34AM
greg said...
anybody thats good to starbucks an pays 10 dollars for a cup of colored water should have there head examined i would rather go to Mc D and get the artery clogging food at least i well know that i well get something for my money
10-06-2007 @ 8:14AM
Louis Leon said...
McD is a great company which knows what to do. They are introducing more healthy meals. They have a wide variaty of meals to choose from. It's your choise.
10-06-2007 @ 8:37AM
shooter said...
To all of you that want to tell everybody what to eat ,drink & smoke. This is america shut up and just live your own life. Imposeing your view's on the rest of the world has got to stop most of you never served a day for this country so shut up and be glad for the choices we still have here and for the men & women that made it that way.
10-06-2007 @ 8:31AM
Carly said...
Yeah... even though they have a variety of meals, though, Ronald McDonald is creepy...
10-06-2007 @ 8:35AM
Greg said...
Starbucks is like a cancer. It keeps growing and getting worse by the day. And honestly their coffee is not that good. To me it's harsh and bitter. For what I would spend on one 24 oz. cup of their coffee, I can buy a whole pound of espresso beans and make my own at home with much better flavor. And I think McD's should concern themselves with other things than trying to keep up with Starbucks. If anything the two should come up with an idea to merge together and completely rule the world.
10-06-2007 @ 8:35AM
Tiffy said...
I think what i said was about this subject more so then alot of the ones you posted