Filed under: Products and services, Consumer experience, Competitive strategy, Starbucks (SBUX), McDonald’s (MCD)
More than three weeks after its earnings release, fast-food giant McDonald’s (NYSE: MCD) is presenting a financial update to analysts later today. International sales have remained strong for the Dow component and a value menu has kept consumers in McDonald’s seats even amid economic tightening. Two of the popular items on the low-price menu are a “snack wrap” for $1.49 and a sundae for $1.00. But commodities prices are on the rise, crimping food producers and restaurateurs.
To keep its growth pace fleet of foot in light of various challenges, McDonald’s is taking a liquid focus. In recent years, the company has gained ground on Starbucks (NASDAQ: SBUX), even winning a taste test with its drip coffee last year. Now the behemoth of the Big Mac is exploring the option of moving further into the gourmet-coffee arena, offering beverages such as iced mochas, caramel lattes, and other espresso-based drinks.
Current experimental pricing has these new drinks at $3.00 a pop, which is cheaper than Starbucks but on par with (or slightly higher than) a full-sized burger or sandwich. While consumers are used to emerging from Starbucks five dollars lighter, can they justify spending more on the empty calories of a sweetened coffee drink than the (basically empty, but still protein-filled) calories of a quarter pounder?
Beth Gaston Moon is an analyst at Schaeffer’s Investment Research.
Read | Permalink | Email this | Comments
Entries (RSS)