MCD vs. SBUX

Post Image I love McDonald’s. Have ever since I was a kid. If I have to choose between McDonald’s and another fast food joint, I’ll choose McDonald’s almost every time. I don’t go there because the food is healthy, and I don’t go there because the environment is relaxing and enjoyable. I go there because the food is inexpensive, convenient, and consistent. I love the double cheeseburger, and it never lets me down. Oh and the fries, you simply can’t go wrong with McDonald’s fries!

I also love Starbucks. Not since I was a kid mind you, but I can still remember the first time my parents took me there. I had a Caramel Macchiato, and fell in love with both the drink and the place. These days I have a grande drip coffee every morning, though I still enjoy the Macchiato and other “signature” beverages from time to time (probably more often than I should). Like McDonald’s, Starbucks is convenient and consistent, but it also offers a wonderful experience.

McDonald’s is the largest restaurant chain in the world, with well over 30,000 locations scattered across the globe. In his book The Lexus and the Olive Tree, New York Times columnist Thomas L. Freidman noted that “no two countries that both had a McDonald’s had fought a war against each other, since each got its McDonald’s.” (there are two exceptions to this). To me this says two things. First, the rise of McDonald’s is fairly recent. Second, it’s everywhere, and it seems impossible for another chain to become as pervasive.

Starbucks likes to tackle problems that seem impossible, such as selling $4 lattes and running two successful stores across the street from one another. As Taylor Clark notes in his book Starbucked, the only company that has a realistic shot at surpassing the presence of McDonald’s is Starbucks. Currently there are over 15,000 locations worldwide, more than half of which are owned entirely by the company (McDonald’s outlets on the other hand are franchised). That’s not bad considering that McDonald’s had a 30-year head start!

Why am I writing about these two companies? Well each is fascinating on its own, but put them together in a global battle for food and beverage supremacy, and you’ve got something that’s especially interesting! And that is what appears to be happening:

McDonald’s Corp’s plan to expand the beverage lineup at its U.S. restaurants with cappuccinos, lattes and other drinks is expected to add $1 billion to annual sales…

McDonald’s has even added a “barista” position in its restaurants and dedicated a section of counter space to the automated espresso machines so customers can see the drinks being made, spokeswoman Danya Proud said.

It was last year that Starbucks decided they would start offering food in addition to coffee. None of the outlets I regularly visit offer breakfast, despite the company making a big push back in July (perhaps that was mostly in the US).

So are the two on a collision course? I don’t think so. I pretty much agree with this Time piece. Even though the clientele at Starbucks is diversifying, it’s hard to envision one company stealing customers from the other, at least not in great numbers. Besides, you’d think the two would cancel out – McDonald’s gains a few new coffee customers, Starbucks gains a few new food customers. Check out this Economist article for more.

For me at least, there is very little overlap between the two (as I tried to point out in the first two paragraphs above). I don’t visit McDonald’s at the expense of Starbucks, nor do I visit Starbucks at the expense of McDonald’s. And even if their respective menus started looking more alike, I can’t imagine that it would change anything for me.

That said, it’s an interesting battle that will be fun to watch over the next few years!

2 thoughts on “MCD vs. SBUX

  1. My local McDonald’s is the B.C. headquarters, and they often experiment with things that later go on to the rest of the chain (or don’t — like pizza).

    They set up a little barista bar a couple of years ago and gave it a go (even having people order from it via the drive-thru for awhile), but eventually shut it down. The Starbucks-like experience just didn’t seem to work in a McDonald’s context.

    Similarly, Vancouver Starbucks are offering McD-style breakfast sandwiches now, but I don’t get the impression they’re selling particularly well. (Not as well as the Tim Hortons equivalent, for sure.) I agree that they are serving different markets and will likely continue to.

    That said, in Canada Tim Hortons is a much bigger competitor to McDonald’s than Starbucks is, and IIRC, Tim’s (part of the Wendy’s company, BTW) is a bigger food retailer here than McD, if you can believe it.

  2. Thanks for the comment Derek. I think you’re probably right – here in Canada, Tim Horton’s simply can’t be ignored. I mentioned that Starbucks has the ability to put locations across from one another and still have them be successful – I suspect Tim’s might be able to do the same (especially out east).

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