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McDonald's (MCD) to go the latte route

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McDonald's NYSE:MCD latteThe management at Starbucks (NASDAQ: SBUX) will have more restless nights. According to documents from McDonald's (NYSE: MCD), Crain's Chicago Business says that the fast food company "plans to sell lattes, cappuccinos and other specialty drinks in all of its 14,000 U.S. restaurants next year. McDonald's predicts the new drinks will add more than $1 billion a year to sales."

One billion dollars. Starbucks did $2.3 billion in its last quarter, so if McDonald's can pick up that much of the market, it may be hard on Starbucks' same-store sales.

Howard Schultz, the founder of Starbucks, recently told The New York Times that his company had only scratched the surface of the premium coffee market. That may or may not be true, but he does have a much larger company that wants the same market, no matter how big it is.

Starbucks shares trade about $26, near their 52-week low and down from a 52-week high of $40. It does not look like those shares will be moving up.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Last updated: November 14, 2009: 07:48 PM

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