McDonalds vs. Starbucks
Sylvia, Nick, Mark, Kristin
Introducing…… Mc Café
• Starting in 14,000 U.S. locations
• Serving cappuccinos, lattes, mochas,
smoothies, and the Frappe. All priced
.60 to .80 cents cheaper than
Starbucks.
Mc Cafe
• These drinks will be either small,
medium, or large without the
confusion.
• Using Espresso machines displayed on
the front counter.
– Customers will see the beans being
ground and baristas topping the drinks.
So Why the Change…
• McDonald’s executives say that they aren’t
launching specialty drinks to compete with
Starbucks.
• They are instead trying to cater to
customers growing interests in these
drinks.
• Coffee and Iced tea are increasing and
carbonated drinks are declining. So,
McDonald’s didn’t want to miss out on the
growing parts of the beverage business.
So Why the Change...
• McDonalds implemented the Plan to
Win strategy where they remodeled
their stores with large chairs, flat
screen televisions, and wireless
internet access.
• With the Plan to Win Strategy
McDonalds executives realized the
potential for coffee sales in that
environment.
So Why the Change…
• This will add $1 billion to McDonald's annual
sales of $21.6 billion.
• Drinks are priced from $1.99 to $3.29 and
come in vanilla, caramel and mocha flavors.
• Customers were buying food at McDonald's,
then going to convenience stores to get
bottled energy drinks, sports drinks and tea,
as well as sodas by Coke competitors.
So Why the Change
• Only about 800 of McDonald's U.S. restaurants have
the specialty coffee drinks now, and some may not
get the full beverage program until 2009.
• In 2006, McDonald's changed its drip coffee to a
stronger blend and began marketing it as a
"premium" roast.
• Starbucks responded that taste is subjective and its
millions of customer visits per week demonstrated
the popularity of its coffee.
So Why the Change…
Starbucks seeing a threat?
• After downplaying threats from
competition, Starbucks are now ready
to compete with their rivals.
• Starbucks are beginning to see fast food
chains as a threat.
• They have recently added a drive thru
window, breakfast, and lunch
sandwiches.
Starbucks seeing a threat?
• Howard Schultz, Starbuck’s chairman, has said that
the new competition will help Starbucks.
• By expanding the specialty coffee category, over time,
customers will trade to Starbucks because they will be
unsatisfied with the experience and the flavor.
• Howard Schultz wanted to create a comfortable
atmosphere in Starbuck’s
• He wanted people to fall in love with the European
environment like he did when he went to Italy into
espresso bars
Starbuck’s Declining
Even through the recent changes, Starbucks
stocks are still declining, as McDonalds are
rising.
Starbuck’s executives are attributing the
slowdown in sales to a weak economy.
It Ain’t All Good For McDonalds
• This could slowdown the “fast food”
aspect of McDonalds.
• Mc Café could push away customers who
come for cheap food and quick delivery.
• Most McDonalds say that most of their
customers do not even know what a
“latte” is.
Reaction of the Public
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“The idea that McDonalds will provide a high quality cup of coffee with their transfat menu items is a joke. I equate McDonalds coffee with truck stop coffee, which
would be the last place I would go. Starbucks is and will continue to be the gold
standard. McDonalds is just flushing money down the toilet, and they will realize it
soon enough.”
“McDonald’s coffee is better. I got a iced coffee for half the price that was just as
good or better. Plus, has anyone ever noticed that you have to wait 10 minutes
every time you go to Starbucks. McDonald’s service has really improved just as I
have seen Starbuck’s decline.”
Lets all hang out at McDonalds on plastic chairs with fry grease and burger
condiments all over the table. Wow that sounds classy as the guy next to you stuffs
a big Mac in his mouth.
“There was a blind taste test done last year by consumer reports that compared all
of the “typical” coffee vendors such as Starbucks, Dunkin Donuts, Burger King,
McDonald’s etc. Who do you think won the test? That’s right, McDonald’s!”
Questions?