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.

In an area where good coffee is ubiquitous, how does one business stand apart from another? A diverse selection of low-fat bran muffins? Not for me. Free Norah Jones CD samplers? Nope. Sheer, baby-doll negligees with thigh-high boots? Sold.

According to The Seattle Times, along the cluttered roadsides of Seattle's commuter towns, drive-through espresso bars are going to creative lengths to attract business, well, male business at least. These caffeinated joints feature "bodacious" baristas offering not just double macchiatos with almond biscotti, but "flirty service and revealing outfits" (including lingerie and "fetish" ensembles) at establishments with names such as Moka Girls, Bikini Espresso and Natté Latté.

While drive-throughs have long been part of Starbucks Corp (NASDAQ:SBUX)'s business, many independent espresso stands popped up after the state's smoking ban went into effect a year ago. Says Lori Bowden, owner of Tukwila, Washington's Cowgirls Espresso stand, owners of bars, casinos and convenience-stores at that time began renting parking lot spots to espresso stands. And while the debate rages over who started the whole Red Light District element, no one argues that the Git-R-Done nation -- who might never have entered a Starbucks -- are now frequenting their establishments many times a day.

Offended local businesses have set up surveillance but no laws have been broken, as private parts -- including buttocks -- are always covered. Says Bowden, in spite of customer requests "there will be no 'Thong Thursdays.'"

B. Brandon Barker is the author of Operation EMU

According to one taste test performed among four experts in Canada, anyway. Yes, that's four coffee aficionados living in the Toronto area and working in the gourmet coffee field. Canadian Business magazine conducted blind taste tests comparing various drip premium coffees: McDonald's Corporation (NYSE: MCD), Starbucks Corporation (NASDAQ: SBUX), a brand called Tim Horton's, and a new Coca-Cola Company (NYSE: KO) coffee called "Far Coast."

That's the order in which they ranked: McDonald's "Café Roast" blend being the winner with 6.5 "cups" -- as they called their ratings points. Starbucks came in a not-that-close second with 5 cups, Tim Horton's right on its heels with 4, and Far Coast dead last with one single point. And that's only because two judges were nice enough to award it a half point, while the others handed it a goose egg.

Coke introduced Far Coast to market to fast food outlets and convenience stores within the last year.

More news about Starbucks:
-- Starbucks giving warm breakfast to Manhattanites
-- Jim Cramer says Starbucks is worth $50 a share
-- Starbucks, the real estate strategy
-- Baristas recalled?

More news about McDonald's:
-- Beef = sex in China
-- Breakfast all day is healthy

At Starbucks Gossip bloggers and commentators are talking about Friday's $114 million suit against Starbucks (SBUX) for the coupon debacle, which my colleague Sarah Gilbert reported on right here. A class-action suit was probably inevitable given our litigious age and the company's profile. Starbucks has given the fact that the coupons were alterted and distributed beyond their intended scope, and the reason for cancelling the promotion.

Comments at Starbucks Gossip are running about 2/3rds against the suit (by my very rough estimate) last time I checked. Some posters sound bemused over the whole mess, while others are outraged. P. Scranton said, "No wonder attorneys are held in such low esteem." Some people did write in to express feeling "betrayed" by Starbucks -- angry that a large company should get away with pulling back this freebie without some sort of penalty. Starbucks (some consumers seem to feel, anyway) picked up the ball and went home after too many people decided to play. JavaGrrl, who identifies herself as a longtime employee, says that the company was "embarrassed" (all caps) by the entire episode. For me, that embarrassment is punishment enough. I don't want to see a suit go forward, the stock fall, and the costs passed on to the consumer.

The comment that had the funniest, and to me, the most sensible take on the entire matter was this from DeusX: "I think I will be suing my ex-gf of ten years ago, I have a 'good for one free backrub' coupon signed by her with no expiration date."

Starbucks (SBUX) has begun a series of podcasts dedicated to the exploration and appreciation of coffee. I've just listened to the first one so that you don't have to! Using podcasts (and blogging) as tools to educate your consumer base is nothing new, and Starbucks actually does very little of it. This series is tied in with the company's 35th anniversary, and will run weekly this month. Yep -- that "fad" company from Seattle is, in a couple incarnations anyway, thirty-five years old.

They've run a short "promocast" of this series, that Frank Barnako of MarketWatch listened to and described as "lukewarm." So I ignored that and dove right into the full-length premiere today. Well, full-length turns out to be only twelve minutes long, so I don't know how much time I'll be saving you here. Say, nine minutes, if you read fairly fast, but every little bit helps ...

I've blogged previously about unionization efforts by Starbucks (SBUX) retail employees (baristas and store-manager-level personnel) in New York City. Efforts are underway elsewhere too. In Chicago workers in a Logan Square store declared their wish to be represented by the IWW just before the Labor Day holiday weekend. The IWW is the "wobblies" -- a historically important union prior to the first world war, but hardly the Teamsters. However, a branch of the Teamsters: the Amalgamated Lithographers of America issued a press release in protest of the firing of an IWW member in NYC. Leaders in the Logan's Square unionization effort state they feel they should be paid $10 an hour -- which is a nice round number -- and are paid $7.50 an hour now. Most Starbucks employees are eligible for discount stock purchases and grants, but unionized employees in Canada, for example, are not eligible for this benefit. So that's a trade-off to consider.

Rarely do companies readily give over, or willingly share, a degree of control with a collective bargaining unit. Starbucks probably feels that the company offers competitive wages. As a pioneer in providing (at least some degree) of medical benefits to part-timers, management may even feel resentful of any implication that its employees need unions. Starbucks' stated position is that it does not discourage unionizing efforts -- which legally it would have to say anyway, so I put no stake either way in that claim.

Whether these union efforts will factor into the decision making process for investors, I can't say for certain, but frankly I doubt it. At this point most of the information I read about this effort comes from union websites, with an occasional mention in the popular press about an planned event, such as the Logan Square declaration. Retailers like Starbucks operate on such a thin margin that -- were Starbucks to become widely unionized -- there would be some transfer of money into union dues, but any significant increase in pay or benefits would result in the need to cut overall staff, something a union would not be likely to tolerate.

Michael Canfield is a private investor, a business and media writer, living in Seattle. He doesn't own stock in Starbucks.

Starbucks (SBUX) retail sales disappointed in July, and analysts predicted August increases to be somewhere in the 4-5% range. Most predicted closer to 4%.

Today Starbucks reported retails revenue of $617M for August -- a not-so-shabby 5% increase. It's a little early to tell whether we can identify a tightening (or loosening) of consumer budgets affecting discretionary spending. Analysts are waiting and watching SBUX, which, I see from my googling daily, is one very popular benchmark that economists and financial analyst love to use to gauge this kind of spending. Starbucks maintained its "buy" earlier this week from Dan Geiman of McAdams Wright Ragen.

A judge in New York City ruled that jury-awarded damages of $300,000 against Starbucks (SBUX) for spilled coffee on a woman's foot were excessive. The spill or splash, or whatever, caused a two-inch burn, and internal damage that impacts the plaintiff's ballet dancing, her experts testified. We've all heard of these suits -- I think the first was against McDonald's. The judge refused to set aside the verdict or give Starbucks a new trial. He 'll determine what damages to award after an upcoming settlement conference by parties.

My question is, who has the time to bring these types of suits? Once attorney fees are taken out, and the cost of one's own time factored in, the payday can't be that much. Sad really. I doubt lawsuits of this type factor into investors decisions, certainly not suits that entail money damages in the range we're talking about in this case.

Michael Canfield is a private investor, a business and media writer, living in Seattle. He doesn't own stock in Starbucks.

Earlier Sarah Gilbert discussed the economic squeeze that could mean trouble for Starbucks (SBUX) and other retailers of premium-priced gourmet items. The Korean Times reports on a debate that is forming in the country over this type of spending, which for better or worse, Starbucks and the "Starbucks experience" seems to typify in many minds. Becoming a target is part-and-parcel of extraordinary success in branding.

Throughout Asia, rushing through a metropolis Starbucks in hand can be seen as a way to tap into a feeling a sophistication and the idea that one is on globalization's winning team. This is part of a lifestyle called "toenjang-nyo" in Korean cyberspace, according to the rather admonishingly-toned Korean Times story by reporter Park Chung-a (linked above) -- at least, it's called so, when the this practice pertains to young professional or college-age women.

Starbucks Gossip is an attractive and highly active blog "monitoring America's favorite drug dealer" as they word it. Unaffiliated with the Seattle corporation (SBUX), the blog presents company "partners" (employees), as well as customers both frustrated and pollyanna-ish, with a chance drop by and mix it up over Jim Romenesko's imaginative and provocative posts. Commentators tend to get lengthy and rather confrontational,  as the great tipping debate shows. That post originally went up in 2004 and still gets new comments today. Another interesting thread is this question for Starbucks employees: Do you feel obligated to acknowledge customers in non-work settings?

A fun and valuable site for investors and prospective investors who want the skinny on what Starbucks employees are thinking and saying outside the workplace -- as well as what consumer/addicts want cyberspace to know about their favorite (or favorite to hate)  friendly-neighborhood, international-behemoth, Third Place.

Friday mid-afternoon at their store location, a group Starbucks [SBUX] espresso-pullers made known their membership in the IWW Workers Union according to a New York Press report. The public declaration was accompanied by a list of demands. The article quotes Daniel Gross, barista and union organizer, saying the group's main three concers are "a living wage, secure hours of 30 or more per week and an end to the anti-union campaign."  Customers were not served while the demands were being presented.

Starbucks has a one page paper stating its position toward (and opposition to) unionizing in its U.S. locations. I found it on the Corporate Social Responsibility section of the co.'s website as a pdf, dated 05 Dec 2005. (The Starbucks website has gone all pdf happy, btw -- even finding the calorie count of a white chocolate mocha requires downloading a pdf file). The doc claims the company does not "retaliate against workers interested in unionizing" and declares the company's belief that "that the direct employment relationship which we currently have with our partners is the best way to help ensure a great work environment" and that no "third party" such as a union is needed.

A note on terminology: Starbucks calls all its workers "partners" whether management or hourly. Probably needless to say, the IWW website terms baristas and other hourly workers as  "employees" distinct from management. As Paul Williams demonstrates, current and former Starbucks workers can become quite passionate about their relationship with the company.