With the resurrection of McDonald’s (MCD) same-store sales and Starbucks (SBUX) march to 40,000 stores, an ugly competition is shaping up. McDonald’s has about 36,000 stores around the world, so some clash was probably inevitable between the world’s largest fast food chain and the world’s largest coffee shop operator.
As one expert in the food industry pointed out in the New York Times: “It’s a good thing for Starbucks that coffee is a big part of the breakfast decision,” said Tom Miner, a principal in Technomic, a food service industry research firm. “But most Americans spend no more than three minutes shopping for breakfast, which doesn’t leave time for two stops.”
The choice may come down to where you want to stop each AM. McDonald’s has moved into high end coffee and Starbuck’s is selling McMuffin looking breakfast sandwichs.
McDonald’s attributes much of its improvement is sales at stores open more than a year to premium coffee and breackfast food like its egg sandwichs. If it is going to fight to hold those gains, it cannot have those customers go around the corner to Starbucks.
What’s it mean? In all probability, McDonald’s will continue to improve its premium coffee selection. And, Starbucks will offer more hot food for early eaters.
Then, its too very large companies in a race to capture the same flag.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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