When McDonald's announced last week it would open mini coffee bars and serve cappuccinos, lattes, and other drinks at many locations, some analysts viewed the move as a potential death threat to Starbucks. (Starbucks may have agreed with this assessment, as it brought back founder Howard Schultz as CEO.)
The potential $1 billion business would be a significant revenue boost, even for the massive burgermeister. But, as one franchisee says, "It is certainly the biggest potential mistake in the history of the system."
Innovation expert Scott Anthony seems to be taking the latter view in a recent column on Harvard Online. His basic take:
- Coffee making is a make-to-order business, and customization is not at the heart of the McDonald's business model.
- Franchise owners may be reluctant to make a heavy investment in an area with such high risk.
And what of Starbucks? Can Schultz pull the company's arabica beans out of the financial roaster? Maybe Starbucks should counter-program by selling cheese burgers and fries!
Would you buy a deluxe coffee at Mickey D's?
For more on the problems at Starbucks, see this BNET post Starbucks: What Went Wrong at the Top?
(Coffee bean image by Lightmatter, CC 2.0)
Sean Silverthorne
Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.
Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.
