According to a recent news report in Seattlepi.com McDonald’s have erected a billboard in sight of Starbucks headquarters declaring, “four bucks is dumb.” The article goes on to say,
If Dunkin’ Donuts’ taste test commercials were the schoolyard equivalent of blowing spitballs at the coffee giant from afar, then the latest from McDonald’s is like pulling a wedgie. Starbucks employees driving northbound can see the billboard on their way into the city.
Another billboard slogan jabs, “large is the new grande.” The two phrases are displayed on 140 billboards in Western Washington, some of them near Starbucks cafes.
“The billboard placement was done because we picked high visibility locations,” said Alan Finkelstein, who owns four McDonald’s in King County. “We really wanted to point out that ordering an espresso at McDonald’s is quick and simple. Small, medium and large. It’s easy.”
Earlier this year, McDonald’s started unsnobbycoffee.com to promote the launch of espresso drinks in the Seattle market.
Back in October, when the Dow was swinging like a pendulum in the wind, I too questioned the merits of spending ‘four bucks’ on a latte in my post, ‘Are You Clueless For Drinking Starbucks‘. But to compare Starbucks coffee to Mickey D’s coffee is strictly sacrilege.
In truth, my personal footprint in Starbucks’ stores has diminished in the last few months, but my loyalty towards the brand is very much intact. I’ve simply changed my consumption pattern. I now purchase several pounds of Starbucks coffee each month at the grocery store — a more cost-effective alternative then buying one-offs at the company’s retail outlets.
Fact is, their coffee is good. Dark, nutty, earthy, buttery flavors with hints of cinnamon and citrus wake me up in the morning and fill my house with an aroma that, at 5am, smells like manna from heaven.
I’ve tasted McDonald’s coffee on road trips and I’ve got one word for you — SWILL. It might keep your eye’s open at 3am — but it’s not going to comfort your soul or start your day on the right foot.
But I’m not blind either. Starbucks has a real conundrum on its hands. The brand either leans into its destinations as part of its overall unique experience (e.g., comfortable couches, wifi, social, etc.) which neither McDonald’s nor Dunkin Donuts can claim or it starts punching up its taste benefits, which may not be a strong enough claim at this time.
Either way, I fear Starbucks is going to take an even bigger hit in this recession unless it comes up with a new messaging strategy quickly.
Stumble It!
I had seen (a story about) that billboard and thought to myself that the underlying message was more potentially more damaging to Starbucks than the actual taunt: if Starbucks becomes portrayed as a stereotype of the Bubble Era – the way that Rolex and BMW never quite recovered to the hit from reputation they took in the 80s- then they could be in trouble.
Now I’m with you on a personal level– I love strong coffee and we’ve been brewing Starbucks at home for years. Their NYC stores are often such inefficient operations that I find I avoid them due to my aversion to lines.
And it’s a lot easier for a McDonald’s to something about the prices: they have other income sources for their locations. Starbucks is mostly making money on coffee and they’ve got to sell a lot of coffee to pay the rent.
What I’m hoping this means is that they have to shut down a number of their more inefficient or poorly chosen locations rather than all of them.
Time will tell.
It seems to me Starbucks will be challenged during tough economic times. Personally, I never understood the appeal of Starbucks. Maybe it’s living in a city, but there are tons of places to get good coffee without the homogenized Starbucks “world culture” stuff — the music, the silly size names, the barrista wrangler w the headset like it’s a club — not to mention the outrageous prices. McDonald’s is rightly pointing out the silliness of paying $4 for a cup of coffee.
I’m indifferent to its fate. If 50% of Starbucks disappeared tomorrow, would the world be worse off? For me, the answer is a definite no. I can still stand in Astor Place and see four of them. I skip all of them and do meetings at Karen’s on Astor Place.
Great comments Alan. This would be an easy box to paint them in and it’s true Starbucks’ efforts to diversify beyond coffee haven’t been very successful. But apparently their push into oatmeal has be a hug hit among women. That said I don’t see oatmeal saving the day for them. I’m quite sure we’ll see more contraction especially in the inefficient/poorly chosen locations but the big question going forward is how will the brand blunt the pricing attacks of Dunkin Donuts and McDonalds and will the damage be broader/deeper then poor performing stores?
Brian, thanks for the feedback. Your cynical perspective always gives me a good laugh. I can’t argue with the fact that Starbucks has over expanded in the last few years and I was certainly never a fan of its pricing strategy; however, I do like the product. This will be an interesting case to observe as it unfolds. Can the brand equity Starbucks has amassed over the last decade (the good times) carry them through a recession and if so, how?
Brad,
I’m not a huge coffee drinker– but I like Starbucks. There, I said it. Especially their new Clover coffee, which I think tastes a lot better to my novice taste buds. But mostly I like the idea of “third place”.
The sad truth is that Dunkin isn’t really that much cheaper — which is something that is the McD ad really hammer home. But I’m pretty unimpressed with the Sarah Palin style class warrior campaign that I see McDonalds running right now on TV. Especially the one with the two women who mention high heeled shoes– I really don’t get what that has to do with it. And while Venti (for large) is annoying, it’s not much different than having to remember to put Mc in front of everything on the McDonalds menu.
McD may be cheaper, but I’m not really likely to meet someone there (work or play). Dunkin tastes better to me, but with their emphasis is on the “fuel” stimulant aspect of coffee– what’s a casual coffee drinker to do? Good local places are rare.
Starbucks plays an important role that few other retail companies can match– a pretty nice place to visit that treats its employees well and is trying fix some positioning issues for our rapidly declining economy.
ace
Brad,
I too have been following this ‘coffee war’ for lack of a better term. I actually did a little research when Starbucks came out with their Piadini breakfast sandwich in response to Dunkin’ Donuts Egg White Flatbread Sandwich [which ended up being cheaper, and less calories].
http://nycitycitings.blogspot.com/2008/10/coffee-wars-continues.html
This whole thing has been very tit for tat and feel right now Starbucks is definitely the victim of some serious unwarranted bully-ism.
If I were them, I’d maybe try and tap back into the original brand objectives. Wasn’t the idea of Starbucks fashioned after the European coffee bar experience? Back in high school it was a place where I would meet friends, hang out, spend time, [maybe b/c we were under-age and couldn't go anywhere else in our small NJ suburbia]. Now I would never say to an old friend, “Hey meet me at Starbucks and let’s catch up on life”
They’ve become a slave to commercialism in my opinion. All the merchandise, opening in book stores, crazy really REALLY sweet season drinks. Even them selling the coffee in the supermarkets has driven people away from their stores. A definite get me in and out kinda place. In NY especially they’ve become place where people know they can use the bathrooms. I’ve seen bathroom lines longer than coffee lines!
I think the Marketing team and their advertising agency need a trip to Europe and get back in touch with that unique brand experience that we all used to love.