Starbucks (NASDAQ: SBUX) is making an aggressive move into the breakfast business, including a planned budget breakfast launch that looks to capitalize on the same recession that is hurting the company's overpriced coffee sales.
That has some analysts concerned that McDonald's (NYSE: MCD) could face some competitive pressure, but CEO Jim Skinner isn't buying it. He was asked at a luncheon in Chicago whether Starbucks' revamped breakfast menu was hurting his company: "No, I don't think so in terms of market share," he replied.
But before McDonald's shareholders breath a sign of relief, they should wait and see what happens in March. On the third day of next month, Starbucks will begin offering customers their choice a 12-ounce latte with a coffee cake or oatmeal, or a tall coffee with a breakfast sandwich, for $3.99. Starbucks gained fame for being the home of the $4 coffee, but now that includes breakfast too.
The decision to compete aggressively on price will probably hurt Starbucks' brand long-term -- but that doesn't mean it won't screw things up for McDonald's in the short-term. Check out the video below for more on Starbucks' plans.
Visit msnbc.com for Breaking News, World News, and News about the Economy
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
2-21-2009 @ 12:34PM
John said...
McDonalds has the best Coffee & Breakfast!!! I would not step into a Starbucks even if the coffee was free!!!!
2-21-2009 @ 1:01PM
Kent said...
I would think Starbucks would have make significant capital investment to reconfigure their store plan to accommodate breakfast (eggs, beacon, sausage, etc. ???), equipment and seating. Sobeit, but pricing has to be competitive to attract customers vs MCD's. In any case, SB's move toward creativity is a plus.
2-21-2009 @ 2:07PM
xenogears728 said...
Its too late for starbucks. The company has been slow to adapt. Mcdonalds has been holding and gaining ground because they not only have great affordable coffee. They have more reasonable prices.
Before the recession 4 dollar coffee was still absurd. To be quite honest, starbucks isn't going to finish this year. Its going to disappear like circuitcity.
2-21-2009 @ 2:30PM
jason said...
i WISH overpriced Starbuck would disappear all they wanna do is try to raise the prices for everybody, enough said. I have never bought Starbucks and i never will they're way over priced besiddes McDonalds coffee is much better anyway
2-22-2009 @ 12:51PM
MickeyD's said...
First, Starbucks is scrambling to help bottom line, it is called desperation!!!!! Secondly, no way can they even effect McDonalds on thier Breakfast value, no way. Their SINGLE line service at their stores will literally piss off people and they will walk out, ending any hope they may have had to be successful in this field of play. Starbucks is a dead fish!!!!!
4-10-2009 @ 4:25AM
liliyarocks said...
i enjoy starbucks as a special treat every now and then. I have tried coffee in many other stores but starbucks is probably the best.where would teachers be without their coffee?i think starbucks will last ;)