Starbucks has launched new programs to bring back customers, including offering low-price instant coffee and breakfast combinations of food and drinks.For nearly three years, McDonald's has been improving and expanding its breakfast menu. By most accounts, the fact that the world's largest fast food chain is offering premium coffee has hurt Starbucks prospects, especially because McDonald's products are relatively low-priced.
Now, McDonald's plans to do what it can to chase Starbucks out of Europe. According to the Financial Times, "McDonald's is aiming to overtake Starbucks as Europe's biggest coffee chain, with plans to open several hundred McCafé stores selling pastries and cappuccinos this year."
What can Starbucks do? The answer is probably not much. Because of McDonald's marketing prowess, a balance sheet that will allow it to invest in Europe without straining the company's financials, and a brand that is already well-established in Europe, it is likely to do very well with its new franchises.
The market has speculated on more than one occasion that McDonald's will not have much problem pushing Starbucks around. That perception is almost certainly true.
Douglas A. McIntyre is an editor at 24/7 Wall St.