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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.

McDonald's raises bar on coffee: MCD v. Starbucks grudge match? originally appeared on BloggingStocks on Wed, 28 Mar 2007 15:38:00 EST. Please see our terms for use of feeds.

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