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We enjoyed your posts Group D, good job!  It looks like both of our groups touched on some of the same topics; price, quality and atmosphere. Your group seems to be torn between McDonald’s having the upper hand because of price and McDonald’s not being able to compare because they cater to a completely different audience. Our group is in agreement with the latter; Starbucks provides a completely different experience that McDonald’s just can’t achieve in their fast food restaurant environment. Although Starbucks is more expensive, they provide much more personalized service and it’s all about the experience of Starbucks, rather than the value. We would even argue that higher prices might be something that benefits Starbucks. Consumers often equate higher prices with higher quality, so keeping prices slightly higher than McDonald’s could help Starbucks’ argument that it is superior in every sense over McDonald’s.

In one of the posts there was mention of Starbucks’ recycle and incentive programs; this was a nice added touch as many consumers are probably unaware of these programs. Further, your point on price point is valid, and some consumers are budgeting these days. But, let’s not forget that some are not. They still want want Starbucks over McDonald’s, and the increase in summer traffic in their stores is proof that McDonald’s isn’t giving Starbucks a run for its money. Also, Starbucks is innovative. They are the one setting the standard in terms of coffee houses, drinks and snacks. Ice blended drinks at McDonald’s are based off the ever-famous Frappuccino. Also, we believe consumers will always see Starbucks as a better coffee product, no matter what McDonald’s does, because coffee is its main product. It is not a burger chain, that among, other things, happens to have decent coffee.

- Group A (Gionna, Laura, Lindsay, Karla, Mari and Rachel)

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First, we'd like to say, we enjoyed the creativity in your padlet--it looks nice. Interesting perspective as well. Our group was torn in deciding rather or not McDonalds would actually be able to give Starbucks a run for their money. Ultimately for us it came down to what was meant by "run for their money?" Did this mean that McDonalds would take over the market or did it just mean McDonalds would become a tough competitor?

Several members of our group too believed that McDonalds' coffee price point was going to be a big "show stopper" for the industry. McDonalds does market to a larger demographic being that Starbucks markets to higher-end clientele but we also considered Starbucks' continued higher profits due to the loyalty of their customers.

Another argument some of us made was the convenience associated with McDonalds food—it’s quick; whereas Starbucks is known for their long lines and wait times. However, few of us still argued that Starbucks lines have always been long and they've still managed to grow their profits and maintain a loyal customer base. Does it sound like a competition yet?

A big idea we contemplated was rather or not McDonalds would steal some of Starbucks’ customers and many of us found that to be very likely. Realistically, the daily Frappuccino at Starbucks is above some of their customers’ budgets, like students and younger working adults. We all believed that quality justified price; while half of us believed that Starbucks quality is unmatched, the others believed that it is not all that it is cracked up to be. We also discussed articles and press we found detailing McDonalds’ plans of being completely sustainable and incorporating premium quality coffee into their menus as well. Your group is right, Starbucks has beaten out all its competitors within the current American coffee industry; however, the difference with McDonalds is, it’s already a global leader in an entirely different market, only adding coffee to their menus.

Interesting perspective on your group’s last two posts. If more people only went to McDonald’s and purchased a coffee with their Egg McMuffin because it’s convenient, how many Starbucks customers like cmoultri, would end up like karlamgo and grow a preference for McDonalds over Starbucks because of price, convenience, and in karlamgo’s opinion, quality?

- Group 2

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I do not believe that McDonald’s is giving Starbucks a run for its money because they cater to two different audiences. Although McDonald’s serves an assortment of brewed coffee, lattes and blended coffee drinks, their niche still resides in hamburgers and fries. If McDonald’s decided to forego selling hamburgers and fries, I don’t believe they would receive the amount of customers they currently have. For example, I do not go to McDonald’s specifically for coffee.

If anything, I will go to McDonald’s for an Egg McMuffin and also get a coffee due to proximity. When it comes to Starbucks, I will go specifically for coffee and if i’m hungry, also purchase a turkey bacon sandwich.

McDonald’s and Starbucks cater to two different groups. Starbucks will remain a strong competitor because their supply of relatively inexpensive specialty coffee drinks has and continues to be in high demand. Similarly, the inexpensive breakfast, lunch and dinner items continue to be high in demand for McDonald’s.

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When I use to go to Starbucks, I felt that I was just buying the brand. I would spend a tremendous amount on an “okay” drink and “okay” food just to say that I bought “Starbucks”. I would spend about $8 on a given morning. By the end of the week, it was heartbreaking for my bank account. Plus, I was never truly satisfied with the flavor of the coffee or food.

As a kid, my father always told me that McDonalds coffee was better than Starbucks but I never believed him. How could McDonald’s have better coffee than Starbucks? Well, recently I finally decided to give it a try. I bought my first McCafe Iced coffee original flavor for the price of $1.39 and to my very own surprise, it was amazing! That same day I went back and bought a second Iced coffee because it was just so delicious. Currently, McDonalds is my go-to breakfast spot on weekday mornings. I buy my coffee and a breakfast muffin for less than $3. This has not only made my taste buds happy but my wallet too.

Will I go back to Starbucks? Only if I have a gift card. But I would prefer a McDonald’s gift card to buy more iced coffee to be honest.

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For the two companies what it comes down to is what each of the brands provides to its customers. It's certainly understandable to make the argument that McDonald's is giving Starbucks a run if costs are solely considered. For the customer that makes choices based on the price of coffee, it would be ideal for them to opt for Mcdonalds rather than Starbucks. However, for the customers that see the value in the $3 cup of coffee for the taste, Starbucks is the likely chosen option. It comes down to what the customers buy in expectations are and if they feel like it is being met through their cup-of-joe. Understanding that with separate values comes expectations, Mcdonalds can't be seen as giving Starbucks a run for their money simply because they serve a different customer base.                            Aside from costs, within its own niche market, McCafé has its own competitive advantage over the competitors that offer a $1 cup of coffee because of its notable brand. Similarly can be said about Starbucks in beating out competitors like Pete's and Coffee Bean when comparing at how successful Starbucks has been at becoming a household name. Overall, due to the differences in the two customer bases and the value to cost relations, Mcdonalds cannot be considered to be giving Starbucks a run for its money.

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I do not think McDonald's is giving Starbucks a run for their money. I mean, McDonald's coffee is so cheap- half, if not a third of the price of Starbuck's coffee. However, McDonald's is giving Starbucks a run for their customers and service. McDonald's receives three times the amount of orders Starbucks receives in a given day. Yet, they are able to quickly fulfill orders and send customers on their merry way. Starbucks takes far longer and it's not often you go when the line is not extremely long. Also, Starbucks coffee is very expensive. McDonald's carries many of the frapps, capps, iced and hot coffee favorites that Starbucks does. Arguably, Starbucks is "better quality" but is it worth triple the price? No, thank you. I would rather order an iced coffee and biscuit breakfast sandwich that I'll only have to wait 4 minutes for instead!

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Trefis Team , Contributor
Starbucks' recently acknowledged that it is facing operating issues in handling the huge volume of orders generated by the success of its Mobile Order & Pay app. The average number of daily customers at a Starbucks store is less than a third of what McDonald's handles every day and, despite this significant difference, Starbucks' annual revenues are higher than McDonald's.

The reason for Starbucks' higher revenues despite a lower volume of customers is that the average spend per customer visit at a Starbucks store is almost three times that of a customer at a McDonald's restaurant.

Starbucks' business model is aimed at high spending customers and, hence, its stores are geared for a lower daily volume, compared to McDonald's quick service format. McDonald's is working on a transformation and introducing more "gourmet" menu items, which should increase the average customer spend per visit. That said, its model is not comparable with Starbucks. Both companies acknowledge that a significant change in the model impacts their revenues. For instance McDonald's serving fresh patties is an operating issue because it increases the time spent to serve a customer order, impacting its volumes and revenues negatively. Similarly, Starbucks faced a decline in comparable sales in its latest reported quarter, primarily because it could not manage the huge volume caused by the success of mobile order and pay.

Starbucks' strategy to grow via its premium Reserve Roasteries will ensure that the company is able to retain its model and grow revenues. The Reserve stores encourage higher customer spending through "gourmet" coffee and the model will ensure that volumes are manageable and revenues grow at the same time. This will enable Starbucks to leverage its strengths and deliver growth. McDonald's is still struggling to find its identity and the company is experimenting with various options. However, if it is able to attract customers with innovations within the quick service model, the company should see steady growth over the long term.

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Quality Vs. Quick Service: The Difference Between Starbucks And McDonald's

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Starbucks' recently said it is facing operating issues with the huge volume of orders from its Mobile Order & Pay app.

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McCafé has best achieved a competitive advantage against Starbucks by reducing costs. My high school part-time job was actually McDonalds where I fell in love with their delicious hot black coffee. I also recall a lot of our drive thru customers saying things like “This is good stuff” or “This coffee is better and cheaper than Starbucks” and lastly “This coffee is worth the wait. “I will never forget these comments because I would hear them on a daily basis. Especially because the McCafé line is significantly lower in price than Starbucks. A regular coffee at Starbucks can cost up to $6 or more. Personally speaking, I would rather buy my own coffee from the supermarket and prepare it myself at home for the same price, then purchasing overpriced coffee at Starbucks. While at McDonalds, a Large coffee can cost $3 and they even honor the senior discount. Most consumers are price sensitive. With this being said, making the product more affordable to consumers will attract more buyers.

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One big way McDonald’s can be seen giving Starbucks a run for its money is simply by its price point. A cup of coffee from McDonald’s is just $1 contrasting immensely from a brewed cup from Starbucks more than double in price. Individuals on an extremely tight budget but see coffee as a necessity might find themselves choosing McDonald’s over Starbucks because it’s budget-friendly and allows for more cost savings than going the Starbucks route.

Further, I think it’s safe to say that McDonald’s customers are not there for high-quality,  healthy food. They are likely there because it is quick (fast food, duh). Walk into a Starbucks early in the morning when most people are on their way to work and depending on the location, you might find a long line and, with it, a fair wait. McDonald’s almost defines “fast” food. They are able to produce food and beverage items in a short amount of time and although Starbucks is starting to implement drive-thru options, most McDonalds locations have had the drive-thru option available for decades making grabbing a quick cup of coffee or a complete breakfast quick, easy and convenient.

Attached is an article I found that helped see a few aspects of McDonalds vs. Starbucks.

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Since I moved to New York City five years ago, Starbucks has been an almost daily part of my routine.

The Seattle-based coffee chain is so ubiquitous in Manhattan that I pass two in my short walk from the subway to work. Stopping in and ordering a coffee or mocha latte in the morning became part of my subconscious.

But recently, I discovered a better alternative - McDonald's.

The fast food giant started stepping up its coffee game years ago. Since then, the McCafe has become a significant revenue stream for McDonald's, with executives crediting the coffee and breakfast business for helping the brand's recent turnaround.

Here are a few reasons I started frequenting the Golden Arches for my caffeine fix.

1. It's cheaper

My large hot or iced coffee costs just $1. That's less than half the price of Starbucks brewed coffee.

McDonald's lattes are about $2 cheaper than Starbucks ($2.79 for a medium vs. $4.70.) That being said, I find the McDonald's mocha latte to be too sugary, so I would still stick with Starbucks for that.

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But when it comes to every day brewed coffee, I think McDonald's is just as good as Starbucks, and actually prefer the lighter taste. Saving money is an added bonus.

2. It's significantly faster and more convenient.

Regardless of the line, I usually get my order in about three minutes at McDonald's. Once I order, I receive a receipt with a number. Once my number is called, I pick up my coffee and leave.

Starbucks' line is typically less efficient, with the whole process taking between 7 and 10 minutes.

There's also a confusing system where you pick up food at one part of the counter, custom drinks like lattes at another, and regular coffee at the register. This means I often receive my order in parts.

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Many times, part of my order has been forgotten or misplaced. I've also had someone else mistakenly take my coffee at the register.

If Starbucks wants to compete in the food space, it will have to figure out how to streamline the ordering experience like McDonald's has.

3. McDonald's has a better food menu

While Starbucks has been making an effort to expand its food menu, it can't compete with McDonald's because it doesn't have a kitchen in-house.

McDonald's has great breakfast items like Egg McMuffins, McGriddles, and hash browns.

While Starbucks has some breakfast wraps on the menu, they are prepared and packaged in advance and lack the freshness of McDonald's.

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Starbucks does have McDonald's beat in the pastry department, so if I'm craving a blueberry muffin I would still go there.

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I started going to McDonald's instead of Starbucks for my coffee - here's why

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Since I moved to New York City five years ago, Starbucks has been an almost daily part of my routine. The Seattle-based coffee chain is so ubiquitous in Manhattan that I pass two in my short walk from the subway to work.