The value breakfasts are a means of competing with McDonalds and other fast food outlets. What happened was that these companies started taking coffee more seriously because they were losing business to Starbucks, where people might eat a pastry or snack. By adding hot meals, Starbucks was not only combatting this new form of competition, but was also taking advantage of an opportunity to meet a customer need and increase the average sale in the morning. The value pricing aspect of hot meals simply reflects the fact that Starbucks is competing against companies offering cut-price breakfast items, and that Starbucks is not attempting to be an actual restaurant, but still just a place for a quick bit.

3. In the long run, Starbucks is more likely to win the coffee wars. McDonalds will always be a successful fast food chain, but coffee is not their specialty. They will never be able to attract people for the coffee in the same numbers as Starbucks for the simple...

The totality of the Starbucks experience is quite unique, compared with McDonalds, and that is part of the attraction, not just the coffee. McDonalds will succeed, and will probably win coffee business from other fast food chains, but Starbucks has its own niche and its own target market, and it serves that market well. McDonalds has trouble serving that market, and as a result even if it succeeds in the coffee business, it is unlikely that this success will come at the expense of Starbucks. Indeed, the coffeehouse/teahouse experience is something that translates across many cultures, whereas the fast food burger joint experience has to be learned by cultures. In most parts of the world, people will understand the Starbucks concept even if they do not understand the products, and that alone will allow Starbucks to attract customers to flourish.