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January 17, 2007

War? No; The Breakfast Battle between Starbucks, McDonalds, Etc.

This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
Jim Cheatham, Chairman and FounderJim Cheatham
Chairman and Founder, LionShare Group
Implications: Starbucks is gearing up to offer new breakfast items.

McDonalds and Burger King are offering upgrade coffee. Reference analysis titled "This Joe's For You" (Jun 06) from this author.

This article shows the increased real market in the breakfast segment. The battle is not so much against each other as it should be in their own segment.

Analysis:

Starbucks has created a cult-like following with their coffee concept and is now going after the quick breakfast market. 

McDonalds and others have upgraded their quality of coffee to reach out to the new awareness of the customers in the coffee market thanks to the success of Starbucks.
It has always been my theory that we should take care of our own operations and let the competition worry about their own.  The published article implies a breakfast battle between chains. 
The real battle is knowing and understanding your own niche and your customer demographics.
McDonalds and others are enjoying success with the new found awareness the customers have in general due largely to the success of Starbucks.  The execution was much more simple in upgrading coffee brewed from arabica beans (instead of the cheaper robusta  that is most common) from the operations point of view.

Starbucks must reach their own niche to the upscale market with what they call breakfast sandwiches with "thoughtfulness".  This has to be done with super-charged microwave/convection ovens and without the full kitchens of the McDonalds world.

The largest battle is going to be teaching their customer base to accept the new technology sandwiches when the current acceptance is strongly in favor of the full kitchen products. Flavored, low fat lattes and sandwiches with cheddar and fontina on the egg is a totally different market from Egg McMuffin.  The real challenge is overcoming the accepted opinions of microwave products. This could work against Starbucks in reverse of the way their coffee awareness worked in helping McDonalds and others in their product introduction.

 


Other Analyses of the Same Source Article:
Where is America headed?
July 22, 2008, Author: GLG Expert Contributor

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