McCafe vs Starbucks: Coffee Wars

Source: Money MSN

A few years back, who would have thought that the yuppie Starbucks would be locked in a coffee war with a non-competitor like McDonald's? An upscale specialty coffee bar and a fast food burger joint? One of the few items they had in common was coffee, and now it is that coffee that is driving the war for customer loyalty and sales.

It’s like Walmart and Nordstrom suddenly competing for clientele. McDonald's and Starbucks had two diverse customer bases until McCafe was born of McDonald's and specialty coffee married fast food. While for the most part the customer bases are still apart, it’s the middle ground where customers could go either way that is the war’s focus. It’s been easier for McCafe to hone in on specialty coffee than for Starbucks to compete in the fast food arena. Most Starbucks outlets don’t have kitchens so the food is of the wrapped sandwich variety and pastries. Slowly the company is implementing ovens so at least some food items can be warmed up to be served hot.

Michael Brush has covered the subject in detail for a recent article on MSN. To level the battlefield after McCafe’s premium coffee salvo, Starbucks came up with Seattle’s Best Coffee. Through that venue, Starbucks can sell cheaper coffee without cheapening the Starbucks name.

The ball is now in McDonald’s court, as the chain remodels and upgrades the interiors of hundreds of restaurants. The next move, bringing Wi-Fi into the shops, is progressing, and at year’s end over one third of the shops worldwide were online. This is possibly the best news for customers, as they now in many areas can have a burger and fries with their specialty coffee as they surf the internet.

The real burning question remains: Does McCafe feel the need to burn the beans?