Saturday, January 12, 2008

Starbucks vs. McDonald's

Over my morning coffee (a grande nonfat latte), I read the news this week that a battle is brewing between Starbucks and McDonald's. According to the story, McDonald's is planning to capitalize on the public's willingness to pay $4 for a cup of coffee by hiring baristas and dropping espresso machines in 14,000 of their fast-food outlets. Meanwhile, Starbucks, with business lagging, is fighting back with an "if you can't beat 'em, join 'em" strategy, by offering heated breakfast sandwiches and adding drive-thru windows to some of their locations.



I've always thought of these two chains as polar opposites — one designed as a sophisticated faux living room where customers could get a decent coffee drink and read their newspapers; the other, a riot of plastic-and-vinyl booths and bright fluorescent lighting where meals are counted in billions served. I wondered if it was really possible for these two worlds to collide. If McDonald's built its own version of a grande nonfat latte, would Starbucks customers come?

To determine whether Starbucks and McDonald's customers are the same or different species, I turned to Hitwise data. With the assumption that I'd glean some information about each camp's patronage by investigating who visited the fast-food chains' respective websites, I compared their demographics. Here's what I found. Visitors to Starbucks.com skew female: Starbucks' website has 8.3% more female visitors than does the McDonald's site. While McDonalds.com visitors cluster in the 18-to-34 age range, Starbucks owns the 35-to-44-year-old group. There's also a clear income gap between the two: McDonald's visitors tend to live in households earning less than $60,000 per year; Starbucks customers lean toward households earning over $60,000.

To add further depth to the profiles, I used Mosaic, a system that divides the U.S. into 50 different behavioral groups, to figure out which segments of our society visit the two websites. I identified the strongest Starbucks and McDonald's types: For Starbucks, it's segment B03, the Urban Commuter Family, described as "college-educated households containing dual income couples." These folks favor golfing as their exercise of choice. The segment that visits McDonald's is type J03, the Struggling City Centers, described as "lower-income households living in city neighborhoods in the South."

The interesting point, though, is the difference in demographic trends between each restaurant's clientele over the last two years. The Big Mac customer base has remained relatively stable, while Starbucks' coffee-drinkers have diversified. It used to be that Starbucks attracted customers from a small, elite segment of the country; now, its visitors pervade many more segments across America. But, as I finish my latte, I still can't fully envision the collision of these two worlds. Just imagine one of those annoyingly finicky coffee-orderers requesting a burger just-so at McDonald's: "I'll have a grande, extra hot Big Mac with one pump ketchup." It just doesn't seem to fit.

Source:TIMES
Posted by Ajay :: 7:40 PM :: 0 comments

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