Starbucks Credits McD's, Cost Savings for Sales Improvement†

CEO Says Golden Arches' McCafe Launch Drew More Customers to Coffee Category

Advertising Age, July 21, 2009 — Starbucks Coffee Co. appears to be coming out of freefall — thanks, in part, to marketing by McDonald's. In a third-quarter-earnings call this afternoon, Starbucks CEO Howard Schultz credited margin improvements, cost savings and attention brought to the category by its rival's big-budget McCafe launch with helping to improve Starbucks' same-store sales. The chain's same-store sales fell 6% during its fiscal third quarter in the U.S., but that still bests the prior quarter, when same-store sales were down 8%

10 Possible Starbucks Responses to McDonald's Coffee Threat

Seekingalpha.com, January 9, 2008 — I've used Starbucks' (SBUX) business strategy as a way to discuss the Trial and Error Economy (here and here). I'm not, by any means, the world's greatest expert on the company, but it provides a great vehicle for teaching about corporate strategy. Now, according to the Wall Street Journal, McDonald's (MCD) will sell premium coffee drinks made by baristas at most of their 14,000 stores.

How should Starbucks react to the McDonald's threat? Here are some ways:

1. Do nothing. Best implemented with one's nose high in the air, saying that Starbucks customers would never buy coffee at McDonald's. Would work very well for three to six months. Ignores the reality that Starbucks' recent growth has come not from Volvo-driving college grads, but from... continue reading