Starbucks is trying out a new "short" cup of coffee for $1 in an effort to better compete with fast food chains. Specifically, they're trying this out in Seattle-area stores in order to see if it helps in light of the competition from McDonald's. The burger giant recently announced plans to expand their coffee offerings, and some suspect this will cut into the Starbucks customer base.
The $1 coffees come with free refills. Most of the usual coffee combinations at Starbucks sell for $1.50 to $4.00 each, so this is a bit of a bargain if you're a plain coffee drinker. The free refills will probably only benefit those who drink their coffee in the stores. Unless you're willing to run back to the store a few times throughout the day, I guess.
Who knows how successful this will be in keeping (and maybe recapturing) some market share? The $1 price point is lower than the cheapest coffee drinks at the fast food and donut shop competitors, so I think it might be a draw. On the other hand, the die-hard coffee drinkers have their favorites, and I don't think saving a few cents will entice them to drink their coffee elsewhere.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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