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Starbucks Corporation (SBUX), McDonald’s Corporation (MCD): The Right Mug of Coffee for a Bright Portfolio

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When we think of Starbucks Corporation (NASDAQ:SBUX), an image of an exquisite coffee experience comes to our mind. The taste, the ambiance; all these just attract coffee lovers to its cafes over and over again. Starbucks has pleased investors, too, with an amazing return time and again, which is evident by the fact that over the last six months, the company’s stock has soared around 20%.

Starbucks Corporation (NASDAQ:SBUX)

Starbucks Corporation (NASDAQ:SBUX) understood that its menu would require more than just varieties of coffee to attract customers. Thus, in the beginning of 2012 it acquired La Boulange, a San Francisco-based bakery chain that enabled the company to add amazing pastries to its offerings. By the end of 2012, Starbucks Corporation (NASDAQ:SBUX) acquired Teavana Holdings, Inc. (NYSE:TEA), which should help it go beyond its core area of coffee.

Further, the acquisition of Evolution Fresh in 2011 added super premium juices with great taste, flavor and, nutritional value in the Starbucks Corporation (NASDAQ:SBUX) menu. As the consumers are getting more conscious about health the company has now decided to post calorie counts for its food items on its menus throughout the U.S. This is a good move as it now has an array of juices, energy drinks, and recently started wholesome Salad Bowls to attract people who count every calorie they eat.

Starbucks Corporation (NASDAQ:SBUX) does not rely entirely on acquisitions for growth but is also expanding its customer base by opening new stores and penetrating newer markets. The company is confident about its growth potential, hence, while competitors are cutting down investments, it is looking to get stronger and plans to open 3,000 more stores in the next four years.

In order to penetrate a growing and emerging market, Starbucks Corporation (NASDAQ:SBUX) entered the Indian market last October with a cafe in Mumbai and now it has a number of stores in other cities as well. China, too, has more than 3,000 Starbucks cafes and there are plans to open more stores with time. As the Asian population is more centered towards tea than coffee, a lot of Starbucks’ success depends on how swiftly it adds products to its menu using Teavana’s acquisition.

Amidst competition

McDonald’s Corporation (NYSE:MCD) is a well-known fast food destination across the globe and Starbucks’ close competitor. McDonald’s is also into coffee, coming in direct competition with the coffee maker. McDonald’s McCafe is comparatively cheaper than Starbucks coffee and attracts pocket conscious buyers towards it.
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