Several weeks ago, the Gorilla reported that the Starbucks coffee chain was experiencing sort of a tough time in business of late, due to several factors. The factors included over saturation, high prices, and increasing costs. Customers have been crossing the street to get to the much cheaper competition, who seemed to have a better value. The Gorilla is, of course talking about McDonald’s, who happens to have delicious coffee for a much cheaper price than many of the other chains. This is not just the opinion of the Gorilla, who happens to be a huge Starbucks fan, but coffee sales at the golden arches have spoken for themselves, and are projected to boost overall revenue at McDonald’s for the coming year by nearly 2%. alone! Not to mention, McDonald’s is planning on opening “coffee bars” in each of its locations and is planning on capitalizing on the gourmet coffee market- giving the big green coffee magnate a run for it’s money.
So, true to it’s aggressive opportunistic nature, Starbucks isn’t taking the news lying down. They are now advertising $1 per cup coffee and free refills at all of their locations, with the intention of undercutting whatever the competition has in mind. The suggested retail price for a small 12 oz. premium roast at McDonald’s is $1.07, and at Dunkin’ Donuts it’s $1.39 for a 10 oz. small. It is a clever and necessary strategy to be sure, but the Gorilla wonders…will the cheaper prices help Starbucks keep it’s loyal customers? Well, it certainly can’t hurt- that is for sure! The current economy is weighing heavily on consumers’ pocketbooks, which is the reason some of them have been frequenting the much cheaper competition. But you must admit, it is a sacrifice to have to go over to the much less “homey” environment of the competition; after all, people don’t just frequent Starbucks because of it’s fabulous coffee, that part is a given.
Starbucks offers so much more than that. It offers something that people crave; the warmth and coziness of a friendly smile, and a comfortable couch or a soft leather armchair to have a seat in. And even if you don’t have time to have a seat at their stores, Starbuck’s, unlike the cheaper competition, has nothing to do but sell coffee and a smile, so their customer service is second to none. So, should America sellout to the coldness and value of the other coffee connoisseur wannabees? The Gorilla hopes they don’t, because Starbucks is like an American institution when it comes to coffee, and it would be a shame to lose it just because the “big guy” decides to get in on the action! (Don’t get the Gorilla wrong- he loves McDonald’s business model!)