Consumer Reports recently compared coffees and came up with an interesting result. According to its tasters, Starbucks' (NASDAQ:SBUX) coffee was outdone by McDonald's (NYSE:MCD) premium coffee offering. Should Starbucks -- and its shareholders -- be experiencing more than caffeine jitters?
Led by a professional tester and some employees of Consumer Reports' food testing unit, the team sampled medium plain coffees (with no sugar and cream, mind you), from two stores each of Starbucks, Dunkin' Donuts, McDonald's, and Burger King (NYSE:BKC). The team of taste testers deemed McDonald's premium coffee the best-tasting and the best value, at $1.40 a cup. It might surprise some people that the priciest cup of that size regular coffee actually came from Dunkin' Donuts, at $1.65.
It's long been known that McDonald's has been upping the ante when it comes to its coffee, as more and more consumers appeared to be flocking to Starbucks for coffee, pastries, and other breakfast offerings. In some outlets, McDonald's sells Newman's Own brand coffee (which is co-branded with Green Mountain Coffee Roasters (NASDAQ:GMCR)), although the news articles about the Consumer Reports study identified the winning brew as McDonald's Premium Roast.
Consumer Reports' choice was certainly an interesting finding, given Starbucks' gourmet reputation. However, there is the saying, "There's no accounting for taste." Although I'm a Starbucks junkie myself, I know people who find Starbucks' coffee beverages any number of undesirable attributes, such as too strong or too pricey. And there are plenty of other coffee companies that would like to take the wind out of Starbucks' sails, such as Caribou (NASDAQ:CBOU) and Peet's (NASDAQ:PEET), not to mention any number of mom-and-pop coffee shops.
Of course, in wondering about the ramifications of a report like this, there's not just the subjectivity of taste but also plenty to ponder when it comes to what other elements differentiate Starbucks from some of the other contenders. There's its ambience: Starbucks is a "third place" between work and home where people like to spend time while sipping java.
There's also the fact that Starbucks may be all about coffee, but it goes way beyond coffee, too. There are thousands of drink variations customers can choose from, tailored to their specific tastes and including chai, tea, and frappucinos. And there are other winning attributes of the Starbucks brand that surely help bolster loyalty, such as its reputation for treating its employees well and providing health care, as well as social and environmental initiatives.
Starbucks has been a coffee-slinging juggernaut, and it's absolutely intriguing that Consumer Reports would find that McDonald's coffee tastes better and offers a better value. The report could take some of the swagger out of Starbucks.
There's something a bit entertaining about experts telling people which coffee tastes "the best," and I can only imagine this high-profile news article has at least some people contemplating a taste test of their own. Of course, it speaks volumes to how serious competition can be, particularly from a large company like McDonald's, and that shouldn't be underestimated. However, I can't help but think that some of the powerful lures Starbucks has built around its brand and business go a long way in cementing its leadership position when it comes to coffee.
Pour yourself some related Foolishness:
- Take a look at Starbucks' quarterly earnings from last week.
- What's missing at Starbucks?
- Here's 2006 in review for the coffee giant.
Starbucks is a Motley Fool Stock Advisor recommendation. To find out what other companies David and Tom Gardner have recommended to subscribers, take a 30-day free trial.
Alyce Lomax owns shares of Starbucks but none of the other companies mentioned. The Fool has a disclosure policy.
