According to Forbes, starting seven years ago, McDonald's Corp has been growing slowly in the total amount of restaurants. Also, for the past seven years, McDonald's has been making a serious effort at "smarter more cost-efficient operations." In turn, this change has increased McDonald's stock.
Starbucks, on the other hand, has only recently decided to enter the "slow growth stage". Since then, the company has closed 1,000 locations and similar to McDonald's, tightened up its operations. This has also led to an increase in Starbucks' stocks. Another important change Starbucks is pursuing is making more of its stores licensees. This is also similar to McDonald's.
The article states that McDonald's has a better profit margin due to its "larger network of franchisees." Furthermore, the productive at McDonald's restaurants has risen over the past few years, because of new menu items, cleaner restrooms and faster drive-through times.
With McDonald's as its model, Starbucks is trying out the same idea. Though Starbucks is trying, it is too early to tell if the company is making any progress.
I think Starbucks has the potential to adapt like McDonald's does, but not in the same magnitude. Even though the two companies "operate from very similar real estate" by hiring the same workers and competing for casual dining and snacking spending by consumers, I think McDonald's has more of an edge over Starbucks. McDonald's offers more selections than Starbucks does, it has been around much longer than Starbucks has, and its restaurants are open longer than Starbucks' restaurants on average. Based on the article, it would be great if Starbucks can adapt because it would most likely lead to greater shares, but I am not sure if Starbucks is the type of restaurant that should adapt in the way McDonald's has adapted.
http://blogs.forbes.com/investor/2010/11/04/can-starbucks-adapt-like-mcdonalds-has/
I agree that I think it is harder to Starbucks to find the same success as McDonalds has because of the differences in menus and options. McDonalds can add coffees and drinks that Starbucks has but if Starbucks began selling fast food like chicken and burgers, I'm not sure that people would buy it. It is easier for companies to gain more support when they have larger options for their consumers. People can always find a coffee around, but they cannot always find burgers on the go like McDonalds.
ReplyDeleteI also agree, McDonald's is the number one fast food franchise in the world. This is mainly due to their vast menu. Starbucks is a different kind of "fast food" because they don't really have meals their. It's more of a coffee shop than a fast food restaurant. Starbucks can gain major success if they open up more locations world wide. They will just not be able to compete with McDonald's, a company that has dominated the fast food franchise for years.
ReplyDelete