McDonald's: Lapping the Field

Apparently people can't wait to go to McDonald's (MCD) to drink the coffee or "swill" as Starbucks' (SBUX) Howard Schultz called it.

McDonald's said Tuesday that U.S. comparable sales rose 4.5% in August. Global comparable sales increased 8.5% in August, while systemwide sales for McDonald's worldwide restaurants rose 14.1%. What does McDonald's give the credit to? Value, Breakfast, Extended hours.

• Value: A pinched consumer will NOT spend extra money on a indistinguishable commodity (for 95% of us) like coffee.
  
• Breakfast: See Value
• Extended Hours: While Schultz goes with gimmicks and closes stores in the middle of the day to train folks on how to make coffee, McDonald's recognizes that not everyone works 9-5. In response, it has extended its hours making it even more convenient for customers to purchase goods from them. Novel idea.
  

What to look forward to? More of the same for both, that is good news for McDonald's shareholders and bad for Starbucks.

Disclosure: Long MCD

Comments

[ubaid:]

the reason i go to mc donalds is not only for the price , but when i am driving i know that most of the times they are open and they have some of the best rest rooms . and very family friendly .

2008 Sep 10 06:16 AM

[JohnnyC:]

If coffee is a commodidty for 95, 85 or even 50% of us, then Starbucks is in a niche market with still way too many stores. Personally, McDonalds has won me over for fast food - but I remain a coffee snob and prefer my bold coffee from Starbucks -home brew or from the store.

2008 Sep 10 08:45 AM

[Mac'em X:]

JohnnyC, I'm with you. I know those who turn up their noses ay Starbucks' "burnt" coffee, but I like it!

And yet - here in Tokyo, McDonalds' ¥100 coffee is a heck of a deal for someone who just wants to sit down with a decent cup. Add an apple pie and a hamburger, each for the same price - the whole thing costs less than one SB coffee or one sandwich! McDonald's is taking away a lot of SB business with that pricing.

2008 Sep 10 09:16 AM