McDonald’s + Coffee = Profits

While the coffee sector isn’t too kind to Starbucks lately, McDonald’s had a profitable second quarter due, in part, to its push into that beverage space.

That’s what WD Partners analyst Dennis Lombardi says in this MarketWatch audio interview where he talks about the fast-food giant’s strong Q2. “People are still learning that it’s a great cup of coffee.”

Is McDonald’s taking away Starbucks’ market share?


7 Responses to “McDonald’s + Coffee = Profits”

  1. 1 Nancy H July 23, 2008 at 6:09 pm

    I think they have to have had an impact on Starbucks…considering you can get a great cup of coffee AND breakfast at McD’s for about the same price as a cup of fancy-shmancy at Starbucks. And in this economy, even the beautiful people are giving up their costly extravagances. Plus, I’ve seen so many people walking out of McD’s with iced coffee in the afternoons (here in the Phoenix Phrying Pan), that must be pulling from the “afternoon Starbucks” crowd. Starbucks worked when it was more important to be trendy than frugal. Those days are over…

  2. 2 Caffeinated Charlie July 24, 2008 at 9:39 am

    No surprise there. I switched from regular “FourBucks” (Starbucks) coffee purchases to FREQUENT consumption of McDonalds Iced Vanilla Coffee weeks ago. It has a much better taste, is often faster to get in and out of the store and is half the price. Much better value in terms of time and money. The only drawback is that Starbucks has a nice atmosphere to cozy up and stay for a while…bring in a paper or a lap top and settle in. McDonalds is an in-and-out venture for me.

  3. 3 Nancy H July 24, 2008 at 12:15 pm

    Heard a radio commercial this morning for Starbucks Treat Receipts…if you buy a cup in the morning you get a receipt for a free second cup that is good until 1:00 p.m. that day. Yeh…I think McD’s success is definitely hurting their sales – all day long.

  4. 4 Anthony F. July 24, 2008 at 3:01 pm

    Although I do not go to McDonalds (don’t eat fast food), I remember their coffee as being fresh, hot and not bitter. Starbucks had a good thing going for a while but I truly believe that any cup of regular type coffee anywhere should not cost over $1.25 plus their coffee is a bit too strong. Starbucks is more my style of place but I think they have diversified while charging too much. Dunkin Donouts jump right on this and I think they make good business moves anyway. Noticed how they barley changed from the old days but just enough to keep up with the modern times.In summary, I will not purchase expensive coffee anywhere unless it’s an emergency. I may even go to Mcdonalds.

  5. 5 MallMaven July 24, 2008 at 5:09 pm

    Why doesn’t Starbucks start selling a cheaper version of their coffee?

  6. 6 MikeF July 25, 2008 at 8:07 am

    In response to MallMaven:

    Because then they would attract less affluent customer, which … would hurt their image. Same as GAP (see how their doing now). Their image is $4.00 coffee and they want it that way so it remains a status symbol. This of course will hurt them in the same way that GAP’s image was always placed above price and/or value. When someone says Image isn’t everything folks, it’s pretty much a true statement.

  7. 7 MallMaven July 28, 2008 at 1:32 pm

    Even McDonald’s has a dollar menu. Maybe Starbucks should consider something similar where they sell “McDonald’s-like coffee for a Dollar.” Taco Bell sure has benefited from their “Why Pay More?” campaign.

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