Monday, July 10, 2006



Starbucks escalates into full breakfast war with assault on Egg McMuffin


Starbucks has opened a new front in its growing war with McDonald’s, exploding the once-contained iced coffee dispute into a major breakfast conflict. Starbucks has unleashed a new line of EggMcMuffinesque breakfast sandwiches. "Let the day begin!" the Starbucks ad exclaims, euphemistically. By "day" they obviously mean "smackdown" or "ordeal of total war."

Apparently, neither corporation is fully satisfied with its place in the breakfast world – Starbucks as an upper half of the market coffee-and-pastry retailer, McDonald’s as a 3-meal-a-day (incl. breakfast) low-end junk food purveyor. McDonald's doesn't want Egg McMuffin customers to nip over to Starbucks for coffee, and now offer what they call "premium" hot coffee. Starbucks wants to cut into the fast-food "full" breakfast trade, by offering breakfast meat 'n' eggs in addition to their former menu of breakfast pastries.

Like all wars that spin out of control, a certain loss of sanity may be at work here. Is there really that much overlap between the customer bases? Does one company think it can make major inroads into the others' patrons? Or is Starbucks simply retaliating for McDonalds' coffee upgrade?

Hard to say. Starbucks breakfast sandwiches are priced just a few dimes higher than the competitors' (not just McDonald's, but also Dunkin' Donuts and the other fast food joints), while offering much more high falutin' ingredients. "Black forest ham" in one sandwich, "eggs florentine" (!) in another.

To make a more apples-to-apples comparison between Starbucks and McDonald's, I order the "peppered bacon and egg" sandwich, a scrambled-egg, cheddar cheese and bacon affair on an English muffin. It's a tad less greasy, a tad more flavorful, especially with the pepper. But at the end of the day, all these breakfast sandwiches taste like airplane food. Mass produced scrambled eggs, reheated in microwaves or convection ovens, will always be rubbery; and the English muffin will always be chewy rather than crsiply toasted. For all its supposed class, Starbucks can't lick these technological cooking problems.

DSCN9127 DSCN9134
Just an Egg McMuffin in a fancy bag? The taped package looks like something from an expensive gift shop, bearing the message: "epiphanies rarely happen over plain toast." Has the word "epiphany" ever been uttered in a McDonald's?

Iced coffee war update

Meanwhile, on the iced coffee war front... McDonald's may have launched a briefly successful blitzkreig (oops! Nazi analogy!) for my business as an iced coffee consumer, but I now think that it is not equipped for success in a longer term war for Starbucks customers.

Apparently, the McDonald's thrust is what military analysts would call a "reconnaissance in force." It's just another in a long line of McDonald's experiments with new menu items. In fact, this one appears to be regional. I've checked out a number of McDonald's restaurants back in the midwest -- no iced coffee.

What's more, my return visit for the McDonald's iced coffee while I was still back east proved rather disappointing. A long wait, an order screwup, and ultimately, it didn't taste nearly as good as it did the first time.

The problem with McDonald's and high end coffee service is that it's retail model is too dependent on the lowest-common-denominator production line. Everything is set up so that it's workers can function as de-skilled automata.

But up-market coffee menus involve too many variables for automation. Recall that Burger King has long exploited this aspect of McDonald's with hamburger service -- McDonald's bread-and-butter, if you will -- with it's "have it your way" theme, offering made-to-order departures from the standard sandwich makeup. McDonald's has always struggled with customer requests for variation.

Coffee is all about that. People take their coffee too many different ways. With or without sugar, cream or black or milk, whole or skim, or soy milk for that matter. And we haven't even gotten to cocoa powder, cinnamon, etc. McDonald's simply can't handle that many choices on a beverage that's so tangential to its core menu mission -- large, medium and small is about it's limit. (On my second visit, for instance, they gave me cream and sugar, when I asked for cream, no sugar.) Starbucks, with its dedicated coffee menu, can production-line all this variation.

While Starbucks can let their customers add their own cream and sugar, to taste, the fast food chains apparently need to control the cream and sugar outlay. They add it for you, I assume, as a cost-containment measure. This strikes me as an insuperable barrier to McDonald's making a serious inroad into the upper-half coffee market, because those customers really want to add their own. Dunkin Donuts, like McDonalds, has their counter employees add the cream and sugar, but they haven't demonstrated any pretensions to the upper-half market.

Meanwhile, on another front...

In its ongoing war on American health, McDonald's steps up its propaganda
campaign: "hey! We're into exercise!"

As an observer of the war, I try to maintain neutrality.

My family recently came home with the McDonald's "yoga" video. There is a human narrator, but the actual "person" doing the postures is basically a character from the Sims. It's very funny...

ygvlkg - the weight in kilograms, of your gavel.
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