Starbucks, Dunkin' Donuts, McDonald's: Coffee Rivals Fight Breakfast War

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In an economy that increasingly favors cheap deals, Starbucks has been flailing while its competitors take advantage. McDonald’s is expanding its McCafe into more and more markets, while Dunkin’ Donuts is running various promotions as well as investing in advertising and new stores. Both companies are aggressively targeting Starbucks customers.

But Starbucks CEO Howard Schultz this week announced an offensive play: the company is launching its own value meals. The details are still vague — Schultz said only that there will be “several breakfast pairings” at “attractive” prices.

But a Starbucks value meal may be a hard sell to those who aren’t already Starbucks regulars. As one analyst told AP, “people automatically see Starbucks as being more expensive.” McDonald’s has been making the best of that reputation and going out of its way to portray the coffee chain as upscale and pretentious. It ran billboards in Seattle that said “four bucks is dumb” and started a website at the url “unsnobbycoffee.com.”

Plus, the new Starbucks deals won’t be the only debuts. Dunkin’ Donuts also introduced a new breakfast special this week — a waffle sandwich for $2.99. And it got aggressive on coffee in the New York Tri-State Area, offering 99-cent lattes all day there. (Dunkin’ sold 99-cent lattes in a previous promotion, but only in the afternoon.)

Burger King has its own new breakfast special as well, but the Whopper-maker isn’t really a player in the coffee game. It’s so non-threatening that when Jim Donald left Starbucks as CEO, his severance package stipulated that he could not work for McDonald’s or Dunkin’ Donuts, but Burger King was okay. And when Consumer Reports tested coffee from all four chains, McDonald’s beat Starbucks, while BK’s coffee was described as tasting “more like hot water.”

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Tags: Starbucks Corp., McDonald's Corp., Dunkin, Web Site Development, Personal Finance, Games, Internet, Personal Technology, Katherine Glover

Katherine Glover is a Minneapolis-based print, radio and online journalist. She's written for Salon.com, Sierra Magazine and many others, and she does a weekly blog on immigration issues for MinnPost.

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1

Piedmont Tech

02/07/09 | Report as spam

RE: Starbucks, Dunkin? Donuts, McDonald?s: Coffee Rivals Fight Breakfast War

I think McDonald's should expand their billboard campaign with an online version. Heck, they could pay for it with coffee mug and tee shirt sales that say "Four Bucks is Dumb." And here's where they should start - buy the domain name www.fourbucksisdumb.com
2

Scoots63

02/09/09 | Report as spam

RE: Starbucks, Dunkin

I'm not sure I completly agree with the statement that people are looking for a "cheap" meal. They are undoubtably looking for value and Starbucks has been the antithesis of value since their inseption. Four bucks is indeed dumb, some might argue stupid. It's a consumable item, lower it to $2 and get them in the door daily rather than once a week or month. It's all about volume, you can't take a GM% to the bank, only cold cash.
3

adam@...

02/09/09 | Report as spam

RE: Starbucks, Dunkin

McDonald's is far from a "great company." But the company is positioned right for the biggest recession anyone alive can remember. It's taking advantage of that position - and in the process will likely crush Starbucks. When people are ready for a cozy chair and soft jazz with their coffee they won't want to stay with McDonald's. But very likely Starbucks will have killed itself by inviting head-on competition with "value meals" that allows McDonald's to crush them. Read more at http://www.ThePhoenixPrinciple.com
4

pamcas11

02/10/09 | Report as spam

RE: Starbucks, Dunkin

Really I belive,that the people want a meal that's healthy for them,and a good cup of coffee.