Wednesday, January 23, 2008

Starbucks vs. McDonald's: Market Discipline

LOS ANGELES (Reuters) - Starbucks Corp is testing $1 coffee and free refills in its Seattle outlets as the global gourmet coffee chain grapples with slower consumer spending and rising competition from fast-food rivals.

Starbucks is experimenting with a smaller, "short" $1 cup as well as free refills for brewed coffee. Starbucks charges around $1.50 to $4.00 for a coffee, depending on size and flavor. Regular coffee prices at both McDonald's and Dunkin' Donuts start in the low $1 range.

Shares in Starbucks have lost around half their value over the past year (see chart above) amid worries about U.S. consumer spending (Hey, why is McDonald's stock up then?), over-expansion and competition from fast-food rivals such as McDonald's Corp that offer specialty coffees.


At 7/05/2008 6:36 AM, Anonymous Anonymous said...

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