The recession has been good to McDonald's. As consumers trade down to cheaper, faster food on the go, McDonald's has kept up its growth during the downturn. Same-store sales rose 4.3% for the quarter that ended March 29. Profits were up 4%, to $980 million.
In this economy, that's an explosion.
McDonald’s is going after ailing Starbucks with its McCafé section of the menu.
McDonald's has been steadily introducing lattes, cappuccinos and mochas in individual markets across the country. Some 80% of the company's 14,000 U.S. stores now sell these drinks, and this week McDonald's will roll out a national advertising campaign trumpeting the McCafé section of its menu.
The timing of the rollout just happens to coincide with the struggles of Starbucks, whose earnings sank 77% this past quarter, mainly because of charges related to store closures and falling real estate values.
McDonald's will gladly kick a double-soy-latte-drinking competitor while it's down.
This is shock and awe," says Steve West, restaurant analyst at Stifel Nicolaus.
The new McDonald's drinks are about $1 cheaper than those at Starbucks.
Is it Starbucks quality? Probably not, but it’s close. Close enough for consumers to make a switch in a down economy.
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