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An Open Educational Resource Provided by Victoria University

StarbucksandMcDonaldstwodifferentstrategiesforcoffee drinkersinAustralia
Developed by Dr Maxwell Winchest er
Senior Lect ur er, Vict oria Univ ersit y, Melbour ne Aust ralia

McDonaldsisseenasapinnacleoffastfoodofferingsglobally.However,McDonaldshaveoftentriedtodiversify theirproductofferingtoincludethingslikeMcSpaghetti,McPizzaandmorerecentlytheHealthyOptionsMenu. SalesofcoffeeatMcDonaldsstoresinAustraliawerenotstrong,andasaresulttheconceptofamore sophisticatedstyleofcafewasexperimentedwith,initiallyinSydney.McDonaldslauncheditsfirstMcCafinthe SwanstonStreetstoreinMelbourne,Australia,in1993.UnlikearegularMcDonaldsstore,McCafssellitems suchaslattesandcappuccinosinrealcups,meanwhilecakesyoudmorelikelyseeinapatisseriearelinedupin displaycases.ThesophisticatedcultureofcoffeedrinkersinAustraliarespondedtothissowellthatthedecision wasmadetotaketheconceptdevelopedinMelbourneglobally.In2001,itbroughttheconcepttotheUnited StatesandMcDonaldsarenowintheprocessofinstallingMcCafsin14,000storesacrosstheUSA.Thishassince resultedinthebiggestrevamptoitsglobalmenuinthirtyyears. StarbucksisfamousforbringingcafculturetotheUnitedStates.Beforelong,Starbucksstoresbecametheplace tobeseenintownsacrossthecountry.In2011,StarbuckshadthethirdhighestsalesfiguresintheUnited States,onlybehindMcDonaldsandSubway.Theirfashionable,spaciousinteriorswerecopiedbymanyother startupcoffeechains.AsidefromitssuccessintheUSA,Starbuckshavedoneparticularlywellincountrieswhere therewasnotanestablishedcoffeeculturesuchastheUK,mostofAsiaandCanada.Starbucksthemselves highlightChinaashavingthepotentialtobethebiggestStarbucksmarketoutsideoftheUSA.Thecompanyhas, however,struggledincountrieswithestablishedcoffeecultureslikeFrance,ItalyandAustralia. StarbucksenteredtheAustralianmarketbyopeningastoreinSydneyin2000.Theirstrategywastobringthe famousStarbuckscultureofcoffeetoAustralia.WhileintheUSA,Starbuckshadcreatedthecafecultureasithad notexistedpriortoStarbucks,inAustraliatherewasalreadyathrivingandsophisticatedEuropeanstylecaf cultureduetothelargenumbersofGreekandItalianimmigrants,particularlyintheEuropeanstylecityof Melbourne,famousforitssidewalkcafs.InMelbournecafestendtobesmall,boutiqueandveryEuropeanin style.Thisstyleofcafetendstobeclutteredwithsmalltablesandchairs,withoutdoorseatingunderumbrellas. Fromdayone,Starbucks,withitsAmericanstyleofcafculturedidnotfaresowellinMelbourne.When StarbucksopeneditsstoreinthecentreofMelbournesfamousItaliancafedistrict,LygonStreet,localtraders lobbiedMelbourneCityCounciltohavethechainstorecloseddown.Starbuckswerenotparticularlybotheredby thisreactionandcontinuedtrainingtheirbaristasfortheLygonStreetStorereadyforopening.Theopening receivedalotofpublicity,especiallywhenitisrumouredthatpriortoopeningvandalismwasseenacrossthe frontofthestoreexpletivelyexpressingadesiretoseeStarbucksgobacktotheUSA. By2008,therewasacullofstoresaroundAustraliawiththreequartersofallAustralianoutletsclosed,including theinfamousoneonLygonStreet.TheCEO,HowardSchultzacknowledgedthatAustraliahadpresentedthem withuniquechallengestotheirbusiness.AccordingtotheBBC,theanswerwasmuchsimpler:Starbucksjust didntknowhowtomakegoodcoffeeinacountryfullofpeoplewhoarepassionatelysnobbyaboutcoffee.

This work is licensed under a Creative Commons Attribution-Non-Commercial-No Derivative Works 3.0 License. To view a copy of this licence, visit: http://creativecommons.org/licenses/by-nc-nd/3.0/

2011 Victoria University Attribution: Dr Maxwell Winchester

An Open Educational Resource Provided by Victoria University


Foodforthought 1. TowhatdegreedidMcDonaldsandStarbucksstandardisedtheirglobalcoffeeoffering? 2. Doesthelongtermoutcomeforbothcompaniessupportastrategyofstandardisationorlocalisation? References Adamy,J.(2008)McDonaldscoffeestrategyisatoughsell.TheWallStJournal,27thOctober. Adamy,J.(2008)McDonald'sTakesOnAWeakenedStarbucksFoodGianttoInstallSpecialty CoffeeBars,Sees$1BillionBusiness.TheWallStJournal,7thJanuary. AnonymousAAPstaffwriters(2008).Starbuckstoclose61Australianstores...shedjobs.Available: http://www.news.com.au/business/starbucksfinallyputsalidonit/storye6frfm1i1111117043631 Delany,B.(2008).StarbuckstoGo.TheGuardian,30thJuly. http://www.guardian.co.uk/commentisfree/2008/jul/30/australia.starbucks Fonseca,M.(2001).StarbucksinvadesLygonStreet.ABCNews.Available: http://www.abc.net.au/pm/stories/s322266.htm Mercer,P.(2008).ShunnedStarbucksinAussieexit.BBCNews.Available: http://news.bbc.co.uk/2/hi/7540480.stm Mescall,J.(2008).WheredidStarbucksgowrong?ABCNews.Available: http://www.abc.net.au/unleashed/32188.html Morrison,M.(2011).StarbucksHitsNo.3DespiteLimitedAdSpending:HowCoffeeChainReversedStrugglesand StormedPastFastFeederRivals.AdvertisingAge,2ndMay2011. Owen,O.,Frazer,L.,&Merrilees,B.(2005).McCcafeSubBrand,ParaSubBrandOrCoBrand?Proceedingsof theAustralian&NewZealandMarketingAcademyConference. Palmer,D.(2008).Starbucks,whatwentwrong?AustralianFoodNews. Wilson,I.&Petrie,D(2008).Starbucksshutsstores,backingawayfromAustralia.BloombergNews.Available http://www.bloomberg.com/apps/news?pid=newsarchive&sid=al6pKGtkBVGs

This work is licensed under a Creative Commons Attribution-Non-Commercial-No Derivative Works 3.0 License. To view a copy of this licence, visit: http://creativecommons.org/licenses/by-nc-nd/3.0/

2011 Victoria University Attribution: Dr Maxwell Winchester