Corporate Governance

Starbucks and Social Responsibility

By J. Robert Brown

We continue our saga on Starbucks and the competitive threat confronted by McDonald's decision to insert baristas in its 14,000 franchises.  We are watching the company's reaction to this competitive threat. 

A week or so ago, Starbucks across the country closed for an evening, the baristas receiving a brush up on the coffee making process.  Apparently Starbucks is attempting, in the period before McDonalds starts its service, to improve quality.  A small piece of good news was that Burger King, the number two hamburger chain, indicated while it might add some specialty coffees to the menu, it is unlikely to follow McDonald's lead and insert coffee bars in all of its franchises.  So, Starbucks will have to compete mostly with one purveyor of hamburgers, not two, at least for the time being. 

Improving quality is a good idea but whether taste will separate a Starbucks latte from a McDonalds one remains to be seen.  Starbucks still needs to find a reason why people will favor its brand over others and the reason has to transcend the coffee itself. 

Full post as published by The Race to the Bottom on March 07, 2008 (boomark / email).