Starbucks (SBUX) Begins To Thrash McDonald’s (MCD) In Coffee Wars

By Douglas A. McIntyre Updated Apr 28, 5:28AM EDT · Published Oct 14, 2:15PM EDT

McDonald’s (NYSE:MCD) was supposed to crush Starbucks (NASDAQ:SBUX) in the premium coffee business when the world’s largest restaurant chain introduced a line of premium java more than a year ago.

It turns out that McDonald’s impressive start as competition to Starbucks, Dunkin’ Donuts, and other specialty coffee retailers has begun to flag.

New research shows the momentum in terms of store traffic patterns has turned in Starbucks’ direction and it is likely that the trend will continue.

New research done in September by ChangeWave shows that those surveyed were 5% more likely to buy coffee from Starbucks in the upcoming 90 days than in the 90 days just past. The figure for McDonald’s was down 3%. Starbucks almost made gains in the previous survey. The research confirms what Wall St. has suspected that the coffee store chain is doing well. Its shares are over $20, near a 52-week high and up from a period low of $7.06.

In the restaurant category, the companies that can expect an improvement in traffic, according to ChangeWave ,are Olive Garden (NYSE:DRI), Chipotle (NYSE:CMG), and Red Lobster. Denny’s and Morton’s are likely to do more poorly.

Looking at trends across the industry, ChangeWave reports better than one-in-ten respondents (11%) now say they will spend more money at restaurants going forward. That represents a 1 point improvement over August. Another 36% say they will be spending less, also 1 point better than before.

Douglas A. McIntyre

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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

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A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.