The coffee wars have been brewing (sorry, I couldn’t help myself) for a few years now, but it looks like they’re heating up. Franchisors Dunkin’ Donuts (#2 on the AllBusiness AllStar Franchise ranking) and McDonald’s ( #12 on the AllBusiness AllStar Franchise ranking) are taking on Starbucks (which are all corporately owned).
Recently McDonald’s launched McCafe coffee stations in about 11,000 units. This is a perfect time for McDonald’s to take on Starbucks, since the recession has hit the coffee giant fairly hard. Last week McDonald’s officials announced that the McCafes were off to a good start and had already “exceeded expectations.” So good in fact that McDonald’s expects sales from coffee, cappuccino, water and sports drinks to eventually reach $1 billion.
Research company BIGresearch just reported that McDonald’s is gaining market share in the coffee battle. While Starbucks is still #1 with consumers who were asked “which fast-food restaurant or coffee shop” they purchased coffee most often, McDonald’s is quickly gaining ground. Starbucks was the favorite of 9.2 percent of consumers, down from 9.8 percent two years ago, 5.4 percent of people cited McDonalds as their favorite, up from 3.3 percent two years ago. Dunkin’ Donuts fell to 3rd place, and fell from 4.8 percent in 07 to 4.1 percent today.
Despite the fall to 3rd place, beverages account for over 60 percent of Dunkin’ Donuts’ U.S. revenues. And of course Dunkin’ is still crowing about its coffee beating Starbucks in a taste test in 2007. Dunkin’ (which says it sells 1.5 billion cups of coffee a year) is planning an aggressive U.S. expansion, hoping to triple the number of stores to 15,000 by 2020.