Can Chick-fil-A Take Coffee Sales from Starbucks and McDonald's?

The process of buying your morning coffee has sure changed over the last generation. Companies have strived to beat each other on quality, and we wouldn’t be fair to the public if we didn’t mention just how much the price has risen for a morning cup of Joe. Now it seems as though Chick-fil-A wants its shot at further competing against Starbucks Corp. (NASDAQ: SBUX) and McDonald’s Corp. (NYSE: MCD) for its slice of the coffee market.

Chick-fil-A has recently debuted its new coffee in a partnership with THRIVE Farmers Coffee to introduce what it calls the quick service restaurant (QSR) industry’s first-ever specialty-grade coffee. Its new coffee was created specifically for Chick-fil-A and is now available in restaurants nationwide.

This new coffee is said to qualify as specialty-grade under the standards of the Specialty Coffee Association of America. Chick-fil-A also said that only the top 10% of coffees consumed worldwide meet this quality designation.

So, how does it rank for pricing? The new Chick-fil-A proprietary coffee blend’s starting price for a small coffee is $1.59. This compares to $1.75 at Starbucks for its “Tall” size equivalent, while McDonald’s McCafe Coffee is at $1.00 on the dollar breakfast menu. All prices do not include local sales tax.

What is at issue here is whether this effort from Chick-fil-A can turn into a new effort or whether this is just another supplement to breakfast and throughout the day. When you think of Starbucks, it seems the first thing that comes to mind is coffee – even though they have been serving food for years. When you think of Chick-fil-A, you would probably be hard-pressed to find anyone who first thinks of coffee – regardless of the time of day.

In all fairness, McDonald’s did make inroads into the coffee world – even if the first thing the public thinks of is likely burgers when they hear the word McDonald’s. And Starbucks has been making inroads into food and other items. The reality is that the business models of fast food, casual dining, and other references to quick serve restaurants have all changed over the last decade. This is what happens when they all want some of each other’s revenues.

There is going to of course be one key difference between Chick-fil-A and other chains selling coffee of any sort to the public – you won’t be able to get the Chick-fil-A variety on Sunday.

Chick-fil-A represents the following data on its coffee partnership:

• The sale of each cup of coffee provides direct revenue to THRIVE Farmers network of family farmers in Central America, allowing them to earn up to 10 times more than farmers earn in traditional revenue models.
• THRIVE Farmers farmer-direct platform includes a unique revenue sharing model that stabilizes the price paid to farmers year over year.
• THRIVE Farmers signs contracts with actual farmers and farmer groups to supply Chick-fil-A coffee, and the farmers’ payment for the sale of their coffee is not tied to the volatile commodity markets.
• Farmers maintain an economic interest in their coffee from the time it leaves the farm until Chick-fil-A purchases it from THRIVE Farmers.
• By eliminating all non-essential layers in the supply chain, this model creates economic sustainability for farmers because they can earn more money, up to 10 times more than through traditional models, which allows them to reinvest in their communities and crops.