Monday, August 28, 2006

Starbucks and McDonald's

Here is a map that shows the number of Starbucks and McDonald's outlets in each country around the world. A couple of interesting details is that 3 new Starbucks outlets open daily, and McDonald's has annual sales that double Afghanistan's GDP.

The main question that springs to mind when I see these two graphs is why it is these companies that have such a global reach? Why aren't there as many Burger King and Kentucky Fried Chicken outlets in foreign countries as there are Starbucks?

(Source: Marginal Revolution)


Anonymous said...

The key to both of these corporation's success is the advertising. While one can argue that taste is the main factor to their success, I have to disagree. In my opinion, I have definatley not had the best hamburger of my life at McDonald's, and there is coffee just as good as Starbuck's at many other places. Yet one thing that these places have that many places do fall short of having is an elaborate marketing scheme. Each year, McDonald's spends about $2 Billion on advertising- advertising which helps appeal to customers all over the world. This advertising creates an atmosphere that is automatically connected to the fast food chain in the consumer's mind. In today's society, time is not somehting to be thrown away; and many consumers all over the world search for that quick and easy bite to eat as opposed to a lenghty meal at a sit-down resturaunt. Thanks to advertising, McDonald's is known globally to not only be quick, but also friendly, tastey, and most importanly- cheap. This atmosphere associated with McDonald's and other similar companies is the main reason why consumers all over the world flock to these places.

One main reason Starbuck's has become so profitable is due to the extremely low cost of production. Starbuck's buy coffee beans from South America at a very cheap price- much less than the price of a Grande Coffee at the local Starbucks. Yet with the help of advertising- Starbucks is able to build its coffee up as being trendy and sophisticated- and often an easy alternative for breakfast for that extra boost in the morning. As a result, Starbucks is able to sell its coffee at such high prices- and the profits that result from this are enormous. While other places such as Burger King and KFC do not have the profits and money availible to greatly expand to the global market, Starbucks is able to transform these profits into available resources to expand on the global market.

-nick wellmon

Anonymous said...

I agree with wellmon on the fact that both of these franchises have great advertising schemes, but I also think that there are a few more factors in play. First McDonald's is a great place to get a cheap, greasy burger, and everything on the menu is affordable for all. Most people worldwide start their morning with a cup of coffee and where better to go then Starbucks. They provide much more of a variety for people with many different preferences that cannot be satisfied at home. I think the key to Starbuck's prtoducts is that they are addicting. Once you get used to having caffeine in the morning you begin to need it to get your day started. While McDonalds uses affordability to attract consumers, Starbucks uses a wide variety of products which are addicting.
Chris Getz

Anonymous said...

I agree with Wellmon and Getz that part of the reason for their enormous global reach is in their advertising. Mcdonalds advertisements are everywhere and the catchy little sayings like 'I'm lovin it' will get caught in your head. I also agree that what allures most people is their fast and affordable service. Starbucks has a easily recognizable green and white symbol that is easy to spot at airports and driving down the road. And as a Starbucks fan I believe their other coffee places do not compare. They are creative and original. No other place has the variety of frappachinos so people are willing to stand in long lines and pay higher prices. Also, stars are often seen with the cups so it is a trend. Burger King, Kentucky Fried Chicken, and other outlets do not have the advertisement, originality, or quick service to compare.
Kate Carruth