More intense competition comes from perennial heavy hitter McDonald’s (MCD), which became a Starbucks rival when it upgraded its coffee in 2006. McDonald’s has 14,000 stores in the U.S. and caters to a wider demographic than Starbucks; it also enjoys increased traffic from its variety of well-established breakfast options. McDonald’s coffee sales increased 15% in 2006. In January 2008, McDonald’s made yet another aggressive foray in the battle for high-end coffee drinkers, announcing that it would install coffee bars in all 14,000 of its U.S. locations. Aggressive marketing campaigns have also emphasized the large cost differential. That being said, there may be enough room for McDonald’s and Starbucks to coexist. It should also be noted that McDonald’s brew Seattle’s Best brand coffee, a brand owned by Starbucks. From wikinvest.com. http://www.wikinvest.com/stock/Starbucks_(SBUX) If this is true, why wouldn’t they come up with their own brew using their massive R&D team?
I get the feeling that Starbucks will not be around in 5-10 years.
I get exactly the opposite feeling.
Yeah me too - Starbucks will be around.
However, I think their market share will be much more fragmented in the future.
Aug 10 “McDonald’s move into mochas and iced lattes has helped the fast-food chain report its seventh consecutive month of increases in global sales this year, underscoring the resilience of its business model in the recession. Sales were up 2.6 per cent in the US – which contributes about half the company’s profits – because of strong sales of coffees and core menu items like hamburgers and fries. McDonald’s expansion into fancy coffees under the McCafé brand is part of a strategy to capture more customers at breakfast time and win them over from coffee chains to its lower-priced drinks. The move has forced Starbucks to defend its brand. It has been running marketing campaigns with the slogan: “It’s not just coffee. It’s Starbucks.” In the US, McDonald’s is selling espressos and mochas in its existing” http://www.ft.com/cms/s/0/7795692a-85cc-11de-98de-00144feabdc0.html
Come on, McD and Starbucks market for different social groups. There are no competitors.