Starbucks and Mcdonalds

Starbucks and Macdonalds are looking more alike although their customer bases are much different. One is more affluent and the other is more price sensitive.

Starbucks seems to be doing better because its sales growth is 8 % while Macdonalds’ is just 3%.

But this data is deceiving because

First, it is more difficult for a company of the size of Mcdonalds to make big. Second, Mcdonalds uses a franchise system and puts a lot of the costs on franchise operators.

That’s why Mcdonalds profit margins is 31 % compared with 13.5% of starbucks’

Thus, victory favors Mcdonald’s in the coffee wars. It is easier for it to become like Starbucks without damaging its brand than the other way around.

SWOT analisys

One company’s strength is the weakness of the other.

Speaking of brand perception, Starbucks has strong positive image. It is doing innovative marketing and focusing on high quality healthy products. On the other hand, the image of Mcdonalds is just fast food service rather than hang out spot for young people.

In terms of aesthetic design, Starbucks shops are comfortable places to spend time at whereas Mcdonalds is known for harsh lightning and hard plastic seats.

For pricing, Mcdonalds has low price products such as Dollar Menu. on the other hand, Starbucks products are high prices compared to Mcdonalds’

For food section, although Mcdonalds has broad variety of food, Starbucks has only basic foods such as sandwiches and pastries.

Now, what strategies have the two companies developed to succeed in the coffee wars?

Starbucks faces a dilemma . it cant cheapen its brand but needs to respond to Mcdonalds challenge so

Starbucks launched its secondary brand, Seattle’s best coffee. its offered at competitors of Mcdonalds such as Subway.

Also, Starbucks is broadening its food selection such as hot breakfast sandwiches similar to Egg Mcmuffin, and introducing new products such as Via instant coffee.

But how did mcdonalds take the challenge?...