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McDonald's not pulling from Starbucks customer base
July 29, 2009
Despite McDonald's massive advertising efforts for its McCafé specialty coffee launch, the chain doesn't seem to have grabbed too many actual Starbucks customers, according to a story by Reuters. Instead, each brand has its own niche.
From Reuters:
Research from YouGov Plc's BrandIndex shows that McDonald's is the hands-down winner on value perception while Starbucks has a substantial lead in quality perception."It's two completely different customers. There aren't too many people who meet for business meetings in McDonald's," said William Smead, chief investment officer at Smead Capital Management in, which owns about 325,000 shares of Starbucks and 60,000 shares of McDonald's across all accounts. Seattle McDonald's has maintained that its McCafé line is not intended to compete with Starbucks beverages. Instead, the company is trying to grab its own share of the specialty beverage market. As part of that effort, McDonald's also is testing smoothies and frappes, which should launch sometime next year.Starbucks CEO Howard Schultz said in the company's latest earnings call that it has actually benefitted from McDonald's McCafé promotions by attracting increased awarenss to the coffee category overall. The company also announced that it will be matching employees' 401k contributions as a result of cutting costs by $550 million.
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