McDonald’s versus Starbucks, the coffee war is set!

Published: 2008 - June/July, Business

McDonald is gearing up to conquer Starbucks’ market share. The fast-food giant has globally launched the McCafè and the top management of Starbucks is starting to quiver and feel the pinch. For some time the chain of cappuccino, latte, long coffees, espresso and tea, whose cups have been seen held in the  hands of many managers, actors and common people throughout the crowded streets of New York, could be replaced by those red white and yellow’s of McDonald’s.
Starting now, and for the next few months, the strategy of the ‘Big Mac’ group will be to couple each McDonald’s eating outlet with a McCafè, whose interiors will be entirely reminiscent of an elegant Italian café.  
Strength of the made in Italy, or a long far ahead outlook of the marketing experts? What’s certain is that the Big Mac’s parent company does not intend to waste time. During 2008 the new shop will be introduced in the 14 thousands American McDonald fast-foods, and then it will be the turn of the rest of the world. The revolution is a hisotry making move, at least with reference to the Americans’ eating habits. And Starbucks, with its 10 thousand and 6 hundred outlets, which would have become 20 thousands in short time, are jittery.
The initiative undertaken by the McDonald’s management has simply routed every more timid forecast. To tell the truth, it’s more than right to remind that it was exactly the Starbucks  chain to introduce in the States the Italian café model with the right stratagems, which could meet the tastes, in some way ‘more watered down’, of the average American coffee drinker. 
It all begun toward the end of the 80’s, when Howard Schultz, founder of Starbucks and at the time a promising young man, happened to vacation in Italy and drink a cappuccino and then an espresso and then again cappuccino. The enterprising ability and the taste of the drink, dark or dappled with milk, convinced Schultz, a billionaire from Seattle, that maybe USA needed a place similar to those Italian’s, where to sip cappuccino or coffee and maybe even take it along walking between a break or shopping, could be an excellent idea. Said and one, the Italian style, with its relaxed coffee break, was liked so much that in short time made Schultz a King Midas of the coffee shop.     The world-famous cup with the Starbucks’ green over white logo, traveled the world over, and for the Americans in career, between Wall Street and Manhattan, to start the day strolling with that coffee in their hands, meant “being in”. To export the Made in Italy in terms of quality of life and well-being, could represent a winning card against the cholesterol flaunted by McDonald and many times put on trial by the World Health Organization and medical associations against obesity, dramatically current in America.
And how about the slogan chosen by Schultz to promote its creature? Once again the reference to the ‘dolce vita’ of the Bel Paese becomes the leitmotif capturing the fashionables. This is how the commercial recited: “To come to us – hinted Starbucks – and taste a good steaming hot coffee it’s necessary to have taste for romanticism, theater and culture”. Do you want to compare with the pit-stop mentality for a sandwich at McDonald?”
Starbucks has gone around the world thanks to the huge publicity by actors, movie directors and stars of Hollywood. Woody Allen has celebrated it in many films making the large paper coffee cup a ‘must’ from which not to be separated, not even during intimate moments of courting.    However, lately the cappuccino king has set a bit the rhythm of time.
The drop in turnover felt by the American group founded by Schultz has caused a drop of 50% of the share at the NYSE in the past year. Between the creeping  recession, which in the USA is repressing consumptions, a cappuccino at Starbucks hovers about three dollars, and turning to more low costs suppliers, which in some ways have made the product less appetizing qualitatively, the sentiment toward the company from Seattle has certainly felt the pinch. 
To exploit the stalemate situation has been McDonald which, strong of its unchanged status on the American scene, has implemented an offensive aimed at cornering the historical brand of the coffee in a ‘paper cup’. And the plan of attack by McDonald has not been far behind. The Chicago’s based fast-food giant has changed its look by relegating to the attic the plastic benches to replace them with comfortable and elegant leather chairs where to enjoy what for the American is still just and always coffee.
But not only. Even with regards to the ambience, the McCafè play on soft lighting and advanced technology. In the McDonald’s café have been set up wireless internet connections and possibility of reloading Mp3 and the iTunes’ points. Sure is that the interest for the dark and energetic drink by the most famous hamburger’s group was in the air already in 2001. Said that, it is certainly proper to say that the refinement is not comparable to that of Starbucks, so that McDonald, to stay in tune with the competition, has turned to a consulting company which, for a year has traveled the United States to learn how the average consumer would have liked to sip the coffee.
The result has been unsettling: McDonald would have had to uniform its image to that of Starbucks. Said and done. Since 2003 the Chicago’s group has started to work with renewed energy on the McCafè project, which will not be just a corner, but a true bonafide new place adjacent to the traditional McDonald, in which to continue to lay on the grill, at an unstoppable rhythm, the immortal meat ball. In the McCafè though, the Italian style will triumph: among cappuccino, espresso and macchiato, the lion share will be played exactly by the Italian style “barista”, bartender, with the cap.   Coffee will be prepared on site at the counter by utilizing an aroma filled blend which in the United States takes the name of ‘mocha’. But where will the true game be played between Starbucks and McDonald? Too simple: the duel will be based on the price. While at Starbucks between a coffee, cappuccino and up to the vanilla flavored frappuccino, customers are willing to spend between 1.99 and 3.29 Dollars, for the same product at McDonald will cost 60 to 80 cents less. And in times of lean cows and crisis from the sub-primes, it’s not peanuts.