Archive for the ‘Starbucks’ Tag

Fourbucks Gets Roasted

mcdonalds_billboard

Starbucks, otherwise known as Fourbucks, just got roasted. The outdoor advertisement pictured above is the product of a local McDonald’s advertising campaign in Seattle. The billboard, which was planted in view of Starbucks headquarters in Seattle this past December, is still one of my favorite ads. Starbucks, the world’s largest coffeehouse company, is now lagging behind the world’s largest fast food chain, McDonald’s in a heated popularity contest.

Not too long ago, Starbucks was the provider of trendy specialty coffees. Of course, you paid a slightly outrageous price for a fancy cup of joe, but who cared? That was BR (“Before the Recession”).

Apparently, Starbucks is proving to be a luxury brand now more than ever. Decline in sales, widespread layoffs, and closings are jeopardizing the company’s vitality. Starbucks’ own brand is hurting its own company as most consumers look for more value. In a Wall Street Journal article released last month, Michelle Gass, Executive VP of Marketing and Category at Starbucks, says, “There have been others that have been propagating the myth of the $4 latte, and that is not true”. She claims that the average price of a Starbucks latte is $3.25. But different state tax rates disprove her claim. For example, a 16 oz. latte sells for $3.52 including tax in Dallas while the same drink costs $4.06 including tax at a Starbucks in NYC. Meanwhile, McDonald’s and Dunkin’ Donuts offer more affordable prices. McDonald’s actually offers the cheapest specialty coffee drinks (small latte is $1.99 and a medium latte is $2.29).

I applaud McDonald’s campaign strategists for their wit and derision. But most importantly, I am left wondering how and if the recession will truly change consumer spending habits. Will McCafe be the new cool Starbucks? What about Payless versus Nike? Will Hood orange juice beat Simply Orange?

If you are wondering where I will go to get my coffee, the answer is nowhere. I am a tea drinker, and I always brew my own pot at home. Now that’s a better value for my buck.