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McDonald’s coffee surge is a real threat to Starbucks

Seattle-based Starbucks, which launched the coffee shop boom, is struggling these days against rivals that offer more coffee and less froth and in the US McDonald’s new ‘proper’ coffee offering is its biggest danger.

Now McD’s is launching cold frappe coffee and smoothies and first results show that stores are putting on lots of extra business even before the national ad campaign happens. McD’s reckons the new drinks will add $1bn a year in turnover.

Last week it emerged that Starbucks in the UK was losing £10m a year, chiefly due to the depredations of Whitbread-owned brand Costa but also the likes of minor high street players like Caffe Nero.

Starbucks has tried to shake up its management and turn its focus back on the product rather than trying to be all things to all customers, like a record company.

But once shopkeepers, like McDonald’s franchisees, are persuaded that it’s worth investing in the kit and people to produce proper coffee (it costs a US McD’s franchisee about $125,000) then the writing really is on the wall for Starbucks.

Everybody thinks they’re a coffee expert these days and Starbucks just doesn’t cut it.

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