The 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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Reader Comments (Page 4 of 4)
10-07-2007 @ 8:03PM
Lauren said...
McD's is nast. I've been boycotting it for over two years ever since I've read a book about what's really in their food, along with other fast food restuarants. (sp?) Starbucks is pretty good, though I'm not a big fan of coffee, and I'm sure McD's isn't gonna start doing blended's and fraps. At Starbucks, you can order the most complicated item, and they'll do it. In McD's, it's about how many customers get served in less time. That's why it's called fast food. Now we've got fast coffee?
10-07-2007 @ 8:03PM
lindalee meadows said...
I am delighted with McDonald's new coffee drinks as never having been one to pay for an expensive name which seemed useless in determining quality and taste. These drinks are so delicious and reasonable compared to Starbux taste and pricing only for their name and marketing. They drinks are sure "keepers" for McDonald's and the wise with self esteem. Great salads initially and now wonderful new coffee drinks. Keep up the good additions and changes in your menu offerings. And to all you soothsayers, you will be missing the boat if you don't buy their stock now which will allow you to overspend at Starbucks!!
10-07-2007 @ 8:12PM
Vicki said...
Why don't they try to not use meat and I MIGHT eat there. Why not a Veggie Burger? Good for you and saves a part of an animal
10-07-2007 @ 8:16PM
Kate said...
Earth to Mea: Oriental CHICKEN salad is not a vegetarian item.
10-07-2007 @ 8:23PM
Marie said...
Everyone has different tastes, therefore some will favor McDonald's and others Starbucks. It's ok to prefer one place over another, but why is it necessary to rip apart the place you don't like? Just don't go there!!!! As far as hygiene and kitchen cleanliness, it can be a problem with even the most expensive and high class restaurants. If you can't overlook, then it's better to stay home and cook. I wound up with food poisening from a very high class restaurant. I was pretty sick for a week. There is no safe bet unless you do it yourself. I've been to different McDonald's and there are some very clean places and I'm impressed, and then there are some very raunchy places....those I walk out of, but isn't that true of all eating places? I don't go to Starbuck's because I don't drink coffee, but I'm sure there are some nasty Starbucks around.
10-07-2007 @ 9:49PM
cmathias said...
The quality of McD is NOT on par with Starbucks.Qwk qnyone that has drank Navy coffee. I relate McD coffee more in the 7-11 quality.
Agree the McD Ice Coffee is good but it could be made better. I have been trying all sort of coffe to get away from Starbucjm but to no avail.
10-08-2007 @ 12:15AM
badgirl said...
McDonald's is meant to be a now and then thing.So if it's junk, it's fine EVERY NOW AND THEN!I think the coffee will be a nice add to their menu.Sonic added iced coffee and I'm sure they are giving Starbucks HELL too!If McD's is half as good as Sonic's..........they've got my vote.And they'll be CHEAPER AND MORE CONVEINIENT!!!!!!!!!!!!!!I'm loving that!
10-08-2007 @ 4:57AM
Barbara said...
Starbucks is great for those folks feeling the need for a little boost to their self-esteem. The marketing firm for Starbucks has done a marvelous job of making people feel they're 'indulging' themselves, and helps people identify with the more affluent when they buy the overpriced nasty garbage Starbucks calls coffee. McDonald's, under the other hand, doesn't try to be pretentious. It serves good coffee at a good price. So if you're feeling the need for a little ego-boost with your caffeine, go to Starbucks. If you're feeling good about yourself and you just want a good cup of coffee, McD's is your best bet.
10-08-2007 @ 8:58AM
Janis Summers said...
I hope they have good coffees
10-25-2007 @ 7:26PM
Brenda said...
My daughter drinks McDonald's coffee every morning before school, and loves the iced coffee. At 14 she's probably the biggest coffee drinker in the family. She still loves her Starbuck's though. I think that out of coffee stops, McDonald's has the best coffee. Great rich flavor. I have not, however, tried Starbuck's regular coffee, and probably never will. It's just too expensive.
11-01-2007 @ 4:19AM
Jessica said...
Actually.
The coffee of starburks is better than McD to me. But the cost is too expensive.
And I can't find the store in my hometown.
In my nation. StarBucks store gather in city.
If the quality of coffee is same between Starbucks and McD, I'll buy McD's one.
11-01-2007 @ 4:29AM
Jessica said...
Actually. The coffee of starburks is better than McD to me. But the
cost is too expensive. And I can't find the store in my hometown.In
my nation. StarBucks store gather in city.If the quality of coffee is
same between Starbucks and McD, I'll buy McD's one.