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Report finds Starbucks fans heading to McDonald’s

NEW YORK Although more Starbucks customers are shifting to McDonald’s than previously believed, the rate at which traffic is declining at the upscale coffeehouse giant is slowing, according to an analyst report released Tuesday.

Asurvey of about 2,500 coffee-drinking consumers by Morgan Stanley & Co. found that nearly half of Starbucks heavy users said they also buy coffee at McDonald’s at least once per week. About 56 percent of Starbucks heavy users said they buy coffee from McDonald’s regularly, up from 51 percent who gave the same response in a similar survey last August.

The survey was conducted about three weeks after McDonald’s launched in May national advertising promoting its McCafe offerings, which are available in about 11,000 of the chain’s 14,000 locations nationwide.

For McDonald’s, the report said, the addition of gourmet coffee will likely build the average check, benefit margins, and, over time, build traffic. The report noted, however, that it was too early to tell if overall visits to the quick-service chain were increasing as a result of the coffee menu additions.

“For Starbucks, defending its turf means there is more at stake,” the report concluded.

 

The good news for Starbucks is that only 20 percent of its customers said they are now going to their favorite coffeehouse less often, down from 28 percent in the survey last August, the report said.

Those who are hitting Starbucks less frequently, however, are citing economic reasons. About 31 percent said they are seeking out cheaper alternatives, while others, including more than one-third of heavy users, said they were ordering smaller or less expensive items.

About 47 percent of Starbucks heavy users said they buy McDonald’s coffee at least once per month, while 42 percent of McDonald’s customers said they go to Starbucks at least once per month. The report said this is a “negative for Starbucks, as many of their core customers appear to be shopping around.”

Still, the survey found that, among all consumers, McDonald’s leads in terms of value and convenience, but Starbucks wins in terms of taste and as “the favorite place” to buy coffee, the report said.

“Over the past nine months, Starbucks’ value perception among its own customers has improved, with 20 percent indicating their brand has ‘best value’ in the category, up from 18 percent in our prior survey,” the report said.

However, the report notes that McDonald’s coffee is roughly 25 percent less expensive than similarly sized Starbucks offerings, and value has been a consistent traffic driver in the current economy.

Earlier this week, however, Starbucks was voted No. 1 in the “best coffee” category in the quick-service segment by more than 6,100 consumers who participated in an online survey by restaurant guide publisher Zagat.

Contact Lisa Jennings at [email protected].

 

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