McDonald’s will post revenues of around $82 BILLION this year making them by far the world’s largest restaurant company. You could add the sales of #2 – #5 together and it wouldn’t total what McDonald’s does in sales. Being so large allows McDonald’s to add on new menu items hot with their top competitors in an effort to hedge their bets and suck the wind out of an emerging competitor. We saw this with McDonald’s adding seafood items to take wind out of the sails of Long John Silver’s, adding tacos to ring Taco Bell’s bell, adding wraps to put a wet blanket on emerging pita concepts and wrap-franchises, adding submarine sandwiches to torpedo Subway, and of course adding a gourmet coffee line to jilt Howard Shultz and Starbucks. While this strategy is sort of like a successful air combat tactic of flying a bigger jet in front of another jet to suck out their wind an crash them, it doesn’t work as well in the restaurant business.
There are a few fundamental reasons why the battle between McDonald’s vs. Starbucks will always be uneven:
#1 Starbucks workers don’t see themselves as “fast food” workers. The staff at Starbucks have more pride saying “I work at Starbucks”. Starbucks workers WANT to be there. McDonalds is more often about convenience than choice.
#2 Starbucks seems to care more. “Perception is reality.” It may just be our perceptions, but generally consumers believe Starbucks has more care for ingredients, fair/ethical treatment of their suppliers and Mother Nature’s idea of food system, and that Starbucks works harder to protect and promote environmental concerns.
#3 Starbucks is still a specialist. How can you have best burger and coffee? When you have a narrow focused product line, you can focus your operational systems, your training, your marketing, and your message to consumers. This is why Sears department stores fell. They dominated for 100 years but then systematically specialty stores came along and yanked out “departments” to create full concepts out of them (i.e. Home Depot, Men’s Warehouse, Victoria Secret, Toy’s R Us, Best Buy, etc). Today when you need to buy electronics you don’t go where they have just one or two models at Sears, you would go to Best Buy where they have lots of choice and are known for just that one thing.
#4 Better experience. I usually feel better after my Starbucks interactions with customers/employees. A visit to McDonald’s often feels more akin to one of those check-cashing stores than the kind of place you’d like to bring your laptop and stay for a while. That makes the coffee better before the first sip.