I'd Like A Big Chair And Music With That Latte

Most people who know me will tell you that I'm an avid Starbucks fan. In fact, I believe that I have significantly helped create the company's hefty bottom line! Recently, McDonald's announced that it will also be adding coffee bars to many of its stores in the U.S. While this is a direct answer to Starbucks' baristas, I am not sure that McDonald's will achieve the same success any time soon.

While McDonald's can compete effectively in providing convenience and low prices to its customers, the company cannot beat the Starbucks experience. Starbucks customers enjoy frequenting the stores for the atmosphere and service. The ability to customize their drinks with "one pump of caramel, extra whip, and one Sweet N' Low" and be able to sit in a cozy oversized chair with a good book far exceeds the desire for higher convenience. In addition, customers enojy the consistency of their experience at stores wherever they go. No matter which city or country Strabucks is established, customers can feel "right at home" with their in-store experience. Starbucks has been able to manage increasing beverage prices based on both the experience that it provides along with the perception that the price charged accounts for the beverage's higher quality.

In general, Starbucks caters to a different breed of customers altogether. These customers typically tend to be more educated, less price-sensitive with higher disposable incomes (making on average of about $55K a year), and enjoy in-store Wi-Fi and easy-listening amenities. Many Starbucks customers are students or work-from-home employees. They frequent Starbucks to find a retreat near a window, people-watch occasionally, and sip on a warm caramel Macchiato.

McDonald's, on the other hand, generally caters to the price-sensitive customer who is looking for a quick (big) bite to eat. Many of these customers often bring their children to the stores and can enjoy watching them play in the secured McDonald's R Gym while they dine. Thus, McDonald's has built its brand on being a lower priced, high convenience provider. For those who go to Starbucks to lounge quietly or socialize amongst a similar group, McDonald's will likely not provide a comparable alternative.

Starbucks has even managed to become a genericized trademark like Kleenex or Xerox. Thus, the phrase "let's go grab some Starbucks" is often used when referring to purchasing even generic espresso beverages. In addition, the company has also done a good job with incorporating its coffee bars at stores like Barnes & Nobles, leveraging a similar customer segment. While McDonald's may grab a small percentage of Starbucks' drive-thru customers who are looking for quick service, it will have difficulty justifying its experience to those who are coffee store experience lovers like myself.