Judith Ganes Chase Appears on WCBS-TV
January 16, 2008
McDonald's Poses Coffee Challenge To Starbucks
Competition Continues To Intensify And So Will Prices
View the Video
Reporting Kirstin Cole
NEW YORK (CBS) - Now that we're all used to paying $3 for a cup of coffee, one of the biggest names in fast food is jumping on the chuck wagon.
McDonald's is the latest to try to lure away the Starbucks crowd.
But as CBS 2 HD has learned, all that competition could end up costing you.
Who doesn't like a creamy, frothy jazzed up cup o' Joe? And with many of us grabbing that expensive cup of coffee daily, competitors of Starbucks are lining up. McDonald's is now promising coffee bars complete with Baristas whipping up everything from a cappuccino to a frappe.
"For the consumer it's a win-win," said coffee consultant Judy Ganes. "There's better coffee at more locations."
Ganes tracks production and pricing of coffee and says Starbucks first poached from McDonald's playbook by offering drive-thrus and breakfast and lunch. Now the roles have reversed.
"McDonald's is hoping this brewing competition will add a billion dollars to its bottom line and is also promising consumers their coffee will cost 60 to 80 cents less," Ganes said.
At $2.11 a cup, the average New Yorker buying a grand Starbucks drip spends $633 a year on her caffeine fix. But Ganes warns there could be a dark side to increased consumption. Despite years of rising demand, coffee producers haven't grown more coffee, leading to higher demand, higher prices and possibly even a shortage.
"Producers aren't make enough money and don't have the incentive to expand," Ganes said.
That could leave a bitter taste in a caffeine lover's mouth.
McDonald's first tweaked its coffee last year, offering a bolder blend. It plans on rolling out coffee bars in all its restaurants by 2009.
© MMVIII, CBS Broadcasting Inc. All Rights Reserved.