In a move that's hard to consider pure coincidence, Starbucks
The news shows that Starbucks is responding aggressively to the new challenge -- as well it should. For people seeking a coffeehouse atmosphere, McDonald's can never truly compete. But for the commuter who just wants a premium cup of coffee, the Golden Arches are a formidable force. If you thought Starbucks had a lot of locations, consider that at 13,000 restaurants, McDonald's has nearly twice as many venues as the coffee purveyor. Price is another factor; a twelve-ounce cup of McDonald's premium coffee will be $0.30 cheaper than Starbucks'.
Of course, investors shouldn't panic about the challenge from McDonald's. Starbucks will surely keep a loyal clientele by continuing to offer one-of-a-kind specialty products. The latest example of this strategy is the company's plan to begin selling coffee from Rwanda, an initiative that plays both to socially conscious customers and those simply looking for something unique.
In the final analysis, McDonald's premium brew will probably peel away some value-minded customers, which might dampen Starbucks' growth somewhat. To stay competitive over the long term, though, Starbucks may just have to learn to let these folks go. The coffee purveyor's long-term success lies in selling premium coffee to customers willing to pay for its taste, not on offering a lowest-price guarantee.
For more on the brewing coffee competition:
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.