Starbucks Perks Up the Competition:
Which National Chain Serves Up the Best Brew?

by Carol Vinzant,
After Starbucks proved that Americans were willing to spend more for a better -- or at least fancier -- cup of coffee, everyone wanted in on what is now an $8.4 billion retail coffee market.

Dunkin' or Starbucks? See Most Favorite

What makes a good cup of coffee? Who makes it best? AOL message board users respond. Will this finally settle the battle of the 'buds between Dunkin' Donuts and Starbucks fans? Click on for America's favorite cup of coffee.

Also: Follow Our Taste Tester's Java Journey.

Sheetz -- Rank: No. 3 Convenience Store
Ranking third for favorite coffee among convenience stores, Sheetz only recently entered the premium coffee market hiring baristas to brew Sheetz Bros. coffee for 329 stores.

More: Visit Sheetz Online

7-Eleven -- Rank: No. 2 Convenience Store
The home of the Big Gulp is popular with coffee drinkers for keeping it hot and cheap. Now a subsidiary of Japanese Seven & I Holdings Co., what effect will tea-loving, Tokyo-Exchange-traded parents have on American coffee lovers?
More: Visit 7-Eleven Online

Wawa -- Rank: No. 1 Convenience Store
The slogan "Gotta Have My Wawa" rings true for many caffeine addicts who've made Wawa java the third favorite cup on AOL's coffee board -- beating out entrenched brands such as PEET's and McDonald's. More: Visit Wawa Online

Krispy Kreme Doughnuts (KKD) -- Rank: Low, Fast Food
Who has doughnuts without coffee? For Krispy Kreme to fall below Carl Jrs. and Speedway for favorite coffee, while "the other" doughnut chain battles Starbucks can only indicate dire challenges ahead. More: Krispy Kreme on Blogging Stocks

Burger King (BKC) -- Rank: No. 3 Fast Food
Burger King's coffee for the average "Joe" campaign helped emblazen the coffee class war against Starbucks. But according to message board posters, its the senior discount that makes BK java (from Sara Lee!) so popular. More: Visit Burger King Online

McDonald's (MCD) -- Rank: No. 2 Fast Food
The Golden Arches was the place for hot, fresh coffee long before the Starbucks reign. Now the buzz is back over senior discounts and Newman's Own brew.

More: McDonald's Buzz on Bloggingstocks

Panera (PNRA) -- Rank: No. 1 Bakery
Growing at the clip of 150 new stores a year, Panera, whose motto is "A Loaf Under Every Arm," took four local awards for 2005 best coffee. Beats Atlanta Bread Company and Au Bon Pain. More: Visit Panera Online

Caribou (CBOU) -- Rank: No. 3 Coffee House (tie)
Started in 1992 and publicly traded since the end of 2005, all 432 Caribou coffee houses are corporate-owned (not franchised) and have become popular as an alternative to the dominate Starbucks brand. More: Visit Caribou Online

Peet's Coffee (PEET) -- Rank: No. 3 Coffee House (tie)
Sharing roots with Starbucks, Peet's had focused on retail sales till it's IPO in 2001, where the company has posted solid gains on Starbucks each year. The message boards concur.

More: Visit Peet's Online

Tim Horton's (THI) -- Rank: No. 2 Coffee House
Canada's largest coffee and donut franchise is successfully expanding into U.S. territory with over 300 outlets, and praise for this brew runs hot.

More: Visit Tim Horton's Online

Starbucks (SBUX) -- Rank: No. 1 Coffee House
Referred to as "Charbucks" or "Morebucks" by naysayers, and quickly defended by addicted fans, Starbucks is the favorite in its own market hands down. It wins in the coffee war on praise for consistency.
More: Starbucks on Blogging Stocks | Next: The Favorite . . .

Dunkin' Donuts -- Rank: No. 1 Fast Food/ No. 1 Overall
Brand wars aren't new. But with Starbucks and the privately held Dunkin' Donuts it's a class war, with Dunkin' offering lattes for less (some say service and atmosphere, too). One thing is certain: Dunkin' fans are determined to win -- and keep the change!
More: Visit Dunkin' Donuts Online | Next: Who's the Real Winner?

Independent Coffee Houses -- Rank: Most Total Votes
More people pick the indie coffee house to any single chain brand. Leading the boards were New Orleans' infamous Cafe du Monde (chicory coffee) and Community Coffee in neighboring Baton Rouge. More: Visit Cafe du Monde Online
Also: Compare With Our Taste Tester's Findings

What Makes a Great Cup Coffee?
Most popular responses from the AOL Money & Finance Coffee Board (as of Jan. 17, 2007) are:
No. 1: Smoothness
No. 2: Price
No. 3: Flavor/Style choices

More From AOL Money & Finance
· When to Buy Organic
· Top 10 Franchises
· Are You Ready For Cloned Food?
· Guess Hot Brands of 2007

Dunkin’ Donuts showed that there was room for a high-quality cup of Joe from a place that is not so high falutin’. The rest of the fast food industry quickly piled on. Everyone knew upscale coffee had hit the masses when McDonald’s -- the quintessential high-production chain -- offered up “premium roast coffee” last March. Now other chains, from Burger King to Juan Valdez, are vying for a piece of the premium java action.

Some wonder whether fast food restaurants will elevate coffee for the masses. But can a burger joint really produce a good hot cup? As with all consumer choices, we’re influenced not only by the product itself, but by intangibles -- what marketers call brand experience -- ranging from what advertising makes us think and feel about buying the product, to in-store ambiance (or lack of it), to whether the staff is friendly or surly and finally, what treats you can eat there with your coffee.

Price may not come into play here. No matter how far down the price comes, it’ll always be cheaper to make a cup of Chock Full o’Nuts or Arabica at home. Or even brew up a cup from a tin of the famous Café Du Monde’s coffee to remind you of your trip to New Orleans.

The New Face of Dunkin' Donuts


To test what they have to offer, I sampled brews from a few of the national chains that aspire to break into Starbucks’ realm.

McDonald’s represents the biggest test for mass specialty blends. Previously, its coffee’s best-known quality was its scalding temperature. In truth, it was passable. But I concur with an AOL message board poster (Visit: AOL Coffee Message Board) who wrote in, “McDonald’s HAD good coffee.” Not anymore. The regular coffee is gone, replaced by a beverage in a sophisticated-looking styrofoam cup with brown and tan swirls. It’s certainly dark -- just like the coffee that’s been sitting on your office coffeemaker all morning. The first cup was so bitter it was undrinkable. The second I regretted for the bitter aftertaste. And it’s still too hot. Yet despite the coffee, McDonald’s offers a fabulous breakfast sandwich.

McDonald’s credits the new premium coffee for increased sales, so someone must be buying it. The only thing that really sets McDonald’s apart from other coffee shops is its insistence on uniformity: They want to mix in your cream and sugar for you behind the counter. That leads not only to slower service, but miscalculation. The coffee you get at your local McDonald’s may not be as awful as the brews I sampled, since McDonald’s sells coffee from different roasters in different parts of the country.

Wendy’s coffee was little better. But at least they aren’t claiming to offer a gourmet product. This is fast food coffee, no pretense. They were quick and let me mix in as many sugars and half-&-halfs as I wanted. Wendy’s friendly service earned them extra points. Something I ordered wasn’t ready for five minutes and the clerk not only warned me, but gave me the coffee free for my trouble.

Burger King was the only pure fast food outlet to deliver on its premium claims. You can order a BK Joe in decaf, regular or turbo. It has a smooth, nutty flavor and a definite caffeine kick. And, once again, you have the freedom to add your own fixins’. I found it a decent cup of coffee for a decent price. However, Burger King’s breakfast sandwiches always seem a little soggy to me.

Dunkin’ Donuts is the establishment really giving Starbucks a run for its money. While you may think of Dunkin’ as a ubiquitous national chain, to New Englanders, it is their hometown hero. The Double D has long taken pride in its coffee, which seems as rich and powerful as Starbucks.

Dunkin’s donuts are, of course, delicious. Taste dictates whether you’ll prefer DD or the more gooey Krispy Kremes. Dunkin’s foray into breakfast sandwiches, however, produced a misbegotten sandwich of misery. Imagine you made an egg sandwich at home, then froze and microwaved it -- maybe ten times. I bet that sandwich would be better than Dunkin’ Donuts’ breakfast fare.

Dunkin’ Donuts also offers lots of the cutesy coffee beverages modeled on milkshakes or slurpees that are so popular at Starbucks. However, not quite as many. Dunkin’s current ads are a swipe at its high-brow competitor, boasting you can “order a latte in English” instead of Fratalian, clearly mocking Starbuckese. Of course, “latte” isn’t an English word, it’s Italian. And at Dunkin’ you may actually have to resort to the picture menu to get the typically novice staff to get you the right beverage.

Starbucks has many detractors. Some purists claim it over-roasts, some message board users find it too dark, still others object to its world domination. Yet Starbucks remains the gold standard for many Americans. Small towns vie for a Starbucks as a symbol of accomplishment and feel slighted if they can only manage to lure a Caribou Coffee or Peets. And it does deliver up a reliably strong and flavorful cup of coffee -- or any permutation of a hot or cold caffeinated or decaffeinated beverage you can imagine. It offers a wide range of sweets and other snacks and is starting to roll out more food options -- all apparently now trans-fat free.

Panera seems like a cross between Starbucks atmosphere and Au Bon Pains bakery. In fact, it is an Au Bon Pain spin-off, one thats done better than the original. The emphasis remains on the excellent breads, tasty cookies and other baked goods. But there are also several grades and flavors of coffee to choose from. The coffee is not quite as good as Starbucks, but the atmosphere is less frenetic and one I stopped in even had a fireplace.

The most common place to find aspiring fancy coffee these days seems to be at gas station convenience stores. Sheetz (a mid-Atlantic chain), 7-11 and Wawa have all made attempts to bring nicer coffee to the masses. But it’s hard to match the efforts of QuikTrip (in the South and now sometimes beyond). This unassuming gas/convenience store offers up friendly, cleaning-obsessed workers and a coffee alley -- the first part of a three-wall drink emporium that’s not to be believed.

The coffee is quite good, but the real draw is that this is the ultimate in self-service for personalized drinks, the anti-McDonald’s. QuikTrip encourages experimentation with its “recipes” for drink combinations on the wall and online. And there’s plenty to play with. It has eight cappuccino machines, eight coffee varieties, three latte machines, four flavor syrups, four creamer flavors and half & half. In addition, there are three hot chocolate machines and two frozen drink machines, and 24 fountain drinks.

There are also many regional offerings that are expanding, such as New Orleans’s iconic Café Du Monde. The Café is most famous for its beignets, but its chicory-blend coffee is popular in cans all over and fresh-brewed in a few lucky Louisiana towns. The epicenter is in New Orleans’ French Market, where Café Du Monde has been serving its smooth beverage since 1862. Cut with not only chicory, it is also frequently served 50/50 with hot milk (ask for it “au lait”). It’s not as bitter as regular coffee.

Tim Horton’s, a Canadian donut shop, is pushing south. There’s also a competitor from the South -- Colombia, that is. Juan Valdez, the front man of the National Federation of Coffee Growers of Colombia (a kind of union for farmers), now has several Juan Valdez Cafés in New York, Seattle and Washington. They offer excellent-tasting premium, fair trade coffee in many varieties, some with a Latin flare. Many come with a nice hint of cinnamon. These friendly shops offer all the comforts of Starbucks, minus the long lines, jostling for seating and fussy options, plus free Wi-Fi.

Finally, for all the interest from national chains, many people prefer to buy their coffee from the local deli, diner or coffee shop convenient to work. The pattern of getting your morning coffee is supposed to be one of the hardest consumer habits to change. For that reason, the big chains vying to take on Starbucks may find they ultimately face their biggest fight from the local mom and pop shops.

Carol Vinzant is a freelance writer in New York.



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