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Starbucks vs McDonald’s?

From the February 2017 issue.

With McDonald’s moving to capture more of the coffee business and Starbucks shifting its strategy towards the premium market, are we about to see a clash of the titans?

Starbucks Reserve Chemex

With experts estimating the value of the US coffee market at anywhere from US$37 billion to $59 billion, it’s no wonder that brands big and small are fighting for their share. And like in any mature industry, market leaders are forced to innovate to stay relevant and successful.

Food industry research firm Technomic has identified as “upscaling the QSR (quick service restaurant) experience” as one way to do that.

Research has shown that companies in the quick-service food industry, including the coffee subsegment, are investing money and resources into the customer experience to set themselves apart from their competition, particularly fast-casual restaurants that are considered slightly more upscale.

“There’s always the element of wanting to do better than those before us,” says coffee industry veteran Spencer Turer, who is also Vice President at independent coffee lab and consultancy Coffee Analysts.

He references the coffee waves as an example, with Folgers wanting to put coffee in every kitchen, and Starbucks introducing consumers to and setting the standard for accessible specialty coffee.

Then at the start of the third wave, “in the mid-90s, we started to see a shift to higher quality and premium brands”, Turer explains.

With small, premium roasters showing the growing number of coffee connoisseurs that coffee can be “better”, Starbucks is finding itself needing to reestablish its position in the market. The chain has decided to do so by focusing on the customer experience with its high-end Reserve coffee line.

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