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.
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Reader Comments (Page 7 of 7)
10-06-2007 @ 2:46PM
Vallontina said...
True Satya, Starbucks has ambience, internet, good music and different kinds of food on their menu. McDonalds has fast food, noisy kids and non-English speaking employees. You can't compare the two. If I'm out with my friends, we'd rather stop for coffee at Starbucks where we can actually hear each other speak and get our order correct.
10-06-2007 @ 3:21PM
Carrie said...
Starbucks and Mc Donalds are in leagues of their own. The clientele who patronize Starbucks are middle, upper middle class, and are wealthy. McDonald's clientele are middle to a lower class, and cater to people from the ghettos and third world countries. I am a caucasian
middle/middle class male, although they are few and far between, I prefer the White Castle
establishments.
Yummo
10-09-2007 @ 7:03AM
Maureen Flood said...
I would say that Dunkin Donuts is better than both of them in tast.
10-06-2007 @ 5:21PM
Bruno said...
Me and my gal go out for the .99 cent double cheeseburger on special occassions. Cant beat it
10-06-2007 @ 6:53PM
ginni said...
good for starbucks. ive always hated the artifical beef flavoring that they put in every single thing that is on the menu at micky ds. did u look in the photo gallrey? that thing on her tray was sceevy. i think that starbucks shouldnt be fighting with micky ds, starbucks is coffee breakfest, micky ds is dinner they shouldnt have even compeded. micky ds doesnt even come close haha.
10-06-2007 @ 7:49PM
coffee gal said...
you know, its like this,money. honey , anything that saves money and satifies us for years, cant knock it , thats mickie dees, served me when i was dating , surved my children when i was raising them , served them when they were dating , and they all have high schooland college children who love pizzas, but believe me , they never forget Mc.>DEESand nether do i . by the way if its poisoning us i am 75 yrs. old, i have diabetis, when my bloodsugar gets low, and i feel sweatie and tired, i take my lunch break at mc.dees, and take a long time savoring my lunch, too each his own ,i love you all,granny
10-08-2007 @ 9:13AM
angelzkiss44 said...
I don't like neither places so they can do what they want, Starbucks coffee the last time i got was so strong. Plus the only thing i do get from Mc D's is the coffee.
10-08-2007 @ 10:57AM
donna said...
As a vegetarian, I go to McDonalds for their wonderful coffee, but more often to BK, who in their wisdom offers delicious veggie burgers. If McD's included these on their menu, I'd probably be there everyday. McD's coffee trumps Starbucks in both taste and price.
10-08-2007 @ 1:26PM
Betina said...
What I would like most from McDonald's....Here goes!
Make sure their restaurants are clean. I travel, often stopping to grab a quick bite to eat...but not at McDonalds. I have found them to be very dirty from the floors, restrooms and behind the counter.
So, I don't stop there anymore! I think it is going to take more than coffee to improve their business!
10-08-2007 @ 4:39PM
Jeff said...
The McDs in Brazil have been already doing this. They have parts of the restaurant separated out for a McD Cafe where they sell premium coffee ala Starbucks - fresh made per order. It is quite good and very popular being about half the cost of a latte at Starbucks. Mcd is VERY clever doing this. The McD Cafe's were always packed and with the same clients as a Starbucks - students with laptops, businesmen & women. It's a matter of SAVING about $1.50 per coffee and still have a similar quality
10-08-2007 @ 6:18PM
val said...
the coffee at strabucks &mcdonalds are really nasty.
10-08-2007 @ 6:21PM
val said...
mcdonalds & starbuks coffee are nasty.
10-08-2007 @ 6:26PM
dazzle0130 said...
McDonalds in Competition with Starbucks?
Please , don't make me laugh. That will never happen. McDonalds does not have the class
to perform at the same level.
10-10-2007 @ 8:29AM
kelly said...
McDonalds is NEVER going to beat Starbucks- and I'm not even a Starbuck's fanatic. I only like one drink they have.
McDonalds' coffee is horrible first of all...and every single Starbucks I see has a line going out the door.
There's no way.
10-10-2007 @ 10:54PM
vdroeder said...
no matteer for what reason, when I go to MCDonald's for whatever, I am always smiling. Their food always tastes so good. Starbucks is certainly catering to those young ones who can afford the luxury of ambiance - that is OK - even I enjoy it once in a while, although the prices they charge make me wonder where all the money comes - that is the spending money for the teenagers, etc. ginny