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The Coffee Stock: Starbucks woos the engaged with free coffee, lessons

Vienna, Austria is largely credited with creating the coffee house culture. Its venerable institution of a coffee shop, Café Central, was meeting place, workshop, living room for writers and political firebrands of all kinds. Revolutionist Leon Trotsky was just one famous patron. At the coffee house, you could be sure to connect with the most passionate and literate people around.

While that culture persists in Vienna and many European cities, critics argue that Starbucks (NASDAQ: SBUX), McDonald's (NYSE: MCD) and Dunkin Donuts have devalued coffee's key role in literary and political engagement. I argued last month that this was one of the key failings of Starbucks over the past several years and that the company should endeavor to reclaim the coffeehouse feel. And small steps indicate the chain is trying. Publication of the GOOD sheet and offering free coffee for those who vote seem designed to target the engaged. [Aside: Starbucks changed its qualifications to "anyone who asks" to keep on the right side of election law, which generally bars inducing someone to vote -- or convincing them not to vote -- by giving them anything of value.]

By aligning itself with an ad campaign that encourages voting and prompting its customers to delve deeply into a potentially political issue with its GOOD sheet, Starbucks is clearly attempting to rebrand itself from the accessory of the clueless pregnant celebrity (remember Britney Spears and Jennifer Garner while pregnant, always with a Starbucks cup in hand?) to the brain fuel of the cerebral community organizer. As bold and cutesy stuffed animals and children's insulated mugs are replaced on the counter space with an explanation of the economy or a description of U.S. immigration statistics, it's clear the company is working toward coffee house and away from its industry category ("quick service restaurant").

Recent management comments in last week's New York Times point to more ways Starbucks is working to appeal to the engaged, intellectual consumer.

Continue reading The Coffee Stock: Starbucks woos the engaged with free coffee, lessons

McDonald's McCafe reaches Japan -- look out, Starbucks

After striking out with its test of stand-alone McCafe coffee shops in the U.S. in 2001, McDonald's Corp. (NYSE:MCD) has taken the concept offshore, and apparently with growing success. This week, the Japanese branch of the family announced it will open 15 McCafe outlets in Tokyo and other cities, with plans to expand to other venues.

Other McCafe sites in countries such as Australia and the United Kingdom offer a Starbucks Corp.-like (NASDAQ: SBUX) lineup of cappuccino, espresso and latte, along with baked goods and light meal items. The items are, in the McDonald's tradition, priced below its competitors.

I talked with Danya Proud, spokesperson for McDonald's Corp., about the possibility of such a program relaunching in the U.S. She told me that there are currently 19 test McCafes in the U.S., but they all are umbrellaed areas within McDonald's restaurants, not stand-alone locations. While the company recognizes coffee's growth potential, she said that its development of the product needs to fit within its core brand.

My conclusion? Look for more McCafe-type products on the McDonald's menu, but don't expect a spate of new, separate McCafes in this country.

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Last updated: November 12, 2009: 09:35 AM

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