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Starbucks will be the next McDonald's

Who has the audacity to say that ... even think it? Nobody is bigger than McDonald's Corp. (NYSE: MCD). After all, didn't McDonald's change the way we Americans eat? Didn't fast food and drive-thrus become the norm? Didn't McDonald's capture the hearts and, therefore, the appetite of every little kid with its Happy Meals and Ronald McDonald character? Didn't McDonald's even say that the world was ready for their menu and actually expand around the world? Even in France!

The answers to all the above questions is yes. McDonald's set the table (pardon the pun) to the way we view and eat fast food. Its success fostered major competitors like Burger King Holdings (NYSE: BKC), Wendy's International (NYSE: WEN) and Sonic Corp. (NASDAQ: SONC). It boasts a number of celebrities who have worked there in the past.

But McDonald's is still McDonald's. It has tried to be hip and cool by actually offering salads, but do you really go to a McDonald's to eat a salad? The movie Super Size Me did not do anything for its image either; yet McDonald's still marches on.

McDonald's went public in 1965 and a $2,250 investment back then would be worth nearly $2 million today. What a great success story; 31,000 units spread out over 119 countries. It is truly one great American export. The brand name alone is among the world's top 10 most recognizable and worth untold billions of dollars.

So, who is going to be bigger than McDonald's? The answer is Starbucks Corp. (NASDAQ: SBUX).

Continue reading Starbucks will be the next McDonald's

McDonald's raises bar on coffee: MCD v. Starbucks grudge match?

You should have known McDonald's Corporation (NYSE: MCD) wouldn't take Starbucks Corporation's (NASDAQ: SBUX) movement into its territory -- with its three-dollar versions of Sausage & Egg McMuffins, its doughnuts, its real estate wheeling-and-dealing not seen in McDonaldland since the 80s -- sitting down. No, McDonald's is sending the big guns through the drive-through, and they're coming out with coffee.

This isn't just any coffee. It's "premium," far better-tasting and richer than McDonald's coffee was until a few years ago. Many say, even better than Starbucks' own high-priced drip offering. Now I'm getting ads for McDonald's iced coffee (in mocha, vanilla, and "regular" flavors) with my Big Mac -- it's a test, along with espressos and lattes, that the company might expand to the rest of the U.S. soon. McDonald's is testing a "McCafe" concept with baristas, flavored coffees and biscotti.

Not only is the coffee getting better, but McDonald's is subtly beating Starbucks at its own game by providing superior customer service along with the chain's trademark speed -- you pick up your coffee at McD's drive through window already sweetened and creamed. As a friend said, "friggin convenient when you're late for your flight!"

McDonald's USA President Don Thompson said it best: "You can't get much better profit than adding water to beans." Starbucks has thrived and grown in the past decade with just that secret, and suddenly, it's not such a competitive advantage. As McDonald's is proving, anyone can make coffee a little bit better, and if you have a big enough brand, maybe you can just convince the world to try your attempt. Round three may just go to the Golden Arches.

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DJIA-215.458,376.24
NASDAQ-46.821,445.56
S&P 500-25.52845.22

Last updated: December 04, 2008: 09:25 PM

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