McDonalds vs. Starbucks Sylvia, Nick, Mark, Kristin

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McDonalds vs. StarbucksSylvia, Nick, Mark,
Kristin
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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.

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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.

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So Why the Change

• McDonalds executives say that they arent
  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, McDonalds didnt want
  to miss out on the growing parts of the beverage
  business.

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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.

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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.

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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.

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So Why the Change
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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.

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Starbucks seeing a threat?

• Howard Schultz, Starbucks 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 Starbucks
• He wanted people to fall in love with the
  European environment like he did when he went to
  Italy into espresso bars

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Starbucks Declining

• Even through the recent changes, Starbucks stocks
  are still declining, as McDonalds are rising.
• Starbucks executives are attributing the
  slowdown in sales to a weak economy.

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It Aint 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.

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Reaction of the Public

• The idea that McDonalds will provide a high
  quality cup of coffee with their trans-fat 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.
• McDonalds 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. McDonalds service has really improved
  just as I have seen Starbucks 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, McDonalds etc. Who
  do you think won the test? Thats right,
  McDonalds!

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Questions?