Time has an article about how McDonald’s is doing relatively gangbuster business with its McCafé line of coffee drinks. Now, I’ve never tried one, but I have heard one person describe a vanilla latte from McDonald’s as tasting like one of those cappuccinos you get from the gas station; fine if you’re looking for something incredibly sweet and vaguely coffee-tasting, but not really a latte. But that’s anecdotal and based on an incredibly tiny sample size, and that’s not really the point.
The point is, profits at McDonald’s are up 4%, which is pretty impressive. And the other point is that Starbucks’ earnings are down 77%. Correlation? That’s certainly what seems to be implied.
But not necessarily. For one thing, it appears that the lower earnings at Starbucks are due to, as Time puts it, “charges related to store closures and falling real estate values.” Which doesn’t necessarily mean that people are ditching a somewhat relaxing time at Starbucks in favor of a trip to McDonald’s, despite what those irritating McDonald’s ads saying that drinking a latte from Starbucks turns you into a pretentious intellectual want you to think…. Wait what’s wrong with being a pretentious intellectual?
In any event, looking at Starbucks’ quarterly report, you can see that it had revenue of $2.3bn in Q2 of 2009, versus revenue of $2.5bn in Q2 of 2008. That is down, no doubt, but “only” by about 7.6%. By comparison, McDonald’s had revenues of $5.1bn in Q2 of 2009, compared to revenues of $5.6bn in Q2 of 2008, which is a decrease of about 10%. So, while Starbucks pulls in about half the money McDonald’s does, I think it’s too much to say that McDonald’s is having Starbucks’ lunch. Pardon the pun.
Now, I should make it clear that I frequent neither establishment regularly. I will occasionally stop in to McDonald’s during a trip, but I don’t generally visit. And I have no desire to drink one of their new McCafé things. Mainly because of the afore-mentioned advertising campaign. By the same token, however, I don’t regularly visit Starbucks. This doesn’t really have anything to do with the price, as the price of drip coffee (my preference) is pretty much the same across the board: about $2.00 for a large. It primarily has to do with the lack of free wireless internet connectivity. I do a lot of work at coffeeshops, and having access to the internet is essential. Now, I know that there are certain solutions available, such as signing up for a Starbucks Gold Card for $25.00 a year, that’ll give you two “free” hours of wireless a day, and I know if you sign up for new service with AT&T DSL Elite and Pro, you can get free access to the AT&T hotspots. But I’ve found a place I like, that doesn’t make me jump through hoops to get on the internet, and I’m sticking with it. (So, in other words, I don’t have a dog in the fight.)
