Shop Talk

Retailers, consumers and prices

On the front lines of the coffee war

July 29, 2009

mcdonaldsstarbucks2By Laura Isensee

On her way to work in downtown Los Angeles, banker Teresa Roman recently picked up a large iced vanilla coffee. Her cup had no green mermaid, the iconic Starbucks symbol. Instead, it displayed McDonald’s famed golden arches.

Roman switched from Starbucks iced coffee to McDonald’s when the fast-food giant started selling lattes, mochas and cappuccinos as part of its McCafe beverage expansion that launched officially earlier this year.

One would think the move from McDonald’s would be disasterious for Starbucks, which already had been slashing costs and closing stores after overbuilding during the real estate boom. But for all the angst over McDonald’s noisy entry into Starbucks territory, it doesn’t seem like Roman’s behavior is the norm.

Information from coffee drinkers, analysts and data suggest that McDonald’s and Starbucks are appealing to very different customers.

As part of our reporting, we talked with caffeine-starved workers in downtown Los Angeles. They said they chose their joe based on a variety of factors ranging from convenience and price to taste. 

“It’s not about saving money. It’s about an alternative taste,” said Stova Wong, who picked up a medium regular coffee – three creams, one sugar – at McDonald’s before heading to work in the IT department at a law firm. He now splits his coffee habit evenly between Starbucks, McDonald’s and mom and pop shops.

“McDonald’s coffee is not as dark, but it still provides a good level of coffee taste,” Wong said.

Lawyer Mindy Kay has noticed McDonald’s big advertsing blitz. “It hasn’t made me drink more or less. I did try some of their drinks but I mostly stick to regular coffee … I see McDonald’s first and foremost as a fast food restaurant where I can get good coffee.”

Eric Stevens, a 24-year-old summer associate at a law firm, has been drinking Starbucks coffee nearly every weekday this summer.

“I drink Starbucks mostly out of convenience if the location is close,” Stevens said. The cafe is located in the basement of the building where he works. 

Starbucks is his drink of choice for now. He’s never tried brews from McDonald’s, which is only two doors down, but his favorite coffee is from Peet’s Coffee & Tea. Catch what he has to say in this video:

Comments

I tried a McDonalds latte recently, beforehand I didn’t have too high expectations of it, but it was quite good actually.

 

McDonalds is actually putting out a pretty good product, which is rather surprising given all the problems. But they are using a good bean, not a great bean. I am surprised it took them so long to jump into the gourmet coffee craze seeing how they sell breakfast meals.

 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •