Starbucks CEO: McDonald's And Dunkin' Donuts Don't Sell "Premium Coffee"

Maria Bartiromo interviewed Starbucks CEO, Howard Schultz about the “new” Starbucks and asked him the one question he probably didn’t want to hear:

Earlier you said to me, the media has made such a huge deal about all of Starbucks’ competition. So tell us straight out what the story is here. Have you been hurt by the premium coffee sold at McDonald’s (MCD) or by Dunkin’ Donuts getting more aggressive?

“First off, I don’t think there’s premium coffee being sold at those fast-food places…”

“Second, this is not about the competition. Our customers are not buying a hamburger and fries and then going to get espresso. That’s not the case. What is the case is that there’s a downturn in the economy. As a result, people are coming in less often than they did a year ago. But we control our own destiny. And what we strongly believe is if we take care of our customers, produce the kind of product that is distinctive, and exceed their expectations, we’re going to be in great shape. But we’re going to couple that with relentless innovation that you’ll begin to see in the marketplace in the months ahead.

Uh-oh! That’s not what Consumer Reports says! From Consumer Reports’ fast food coffee taste test:

McDonald’s, $1.35, was decent and moderately strong. Although it lacked the subtle top notes needed to make it rise and shine, it had no flaws.

Burger King, $1.40, looked like coffee but tasted more like hot water. It was a little sour, with an unusual hint of chocolate.

Dunkin’ Donuts, $1.65, was weak, watery, and pricier than Starbucks. It was inoffensive, but it had no oomph. (If you brew with Dunkin’ beans at home, you can make it stronger.)

Starbucks, $1.55, was strong, but burnt and bitter enough to make your eyes water instead of open.

CR’s take. Try McDonald’s, which was cheapest and best, or make your own coffee–just call it something special. The other three were all only OK, but for different reasons.

We consider Starbucks to be a fast food place. Don’t you? Drive-thrus? Check. Mini-stores inside big box stores? Check. Menu items with 700+ calories? Check.

Howard Schultz on Reinventing Starbucks [BusinessWeek via Starbucks Gossip]
Starbucks wars [Consumer Reports]