McDonald’s targets Starbucks crowd with pumpkin lattes

CHICAGO: McDonald’s Corp is adding pumpkin-spice lattes to lure the Starbucks crowd and boost traffic. McDonald’s, the world’s largest restaurant chain, has been introducing pricier items such as chicken wings, McWraps and steak breakfast sandwiches to maintain profitability in the face of higher labour, occupancy and operating costs.

At the same time, the company is expanding its value menu to draw bargain- seeking diners. “They’re trying to further refine the so-called barbell” strategy of selling low-priced, value items along with more expensive fare, John Gordon, principal at San Diego-based Pacific Management Consulting Group and adviser to restaurant franchisees, said in an interview.

They are trying to sell the higher-price food because “they need the margin”. The McCafe pumpkin latte — a mix of espresso, milk and flavored syrup — come in three sizes and are available with whole or non-fat milk, the Oak Brook, Illinoisbased company said.

A 16-ounce latte with whole milk has 340 calories and costs $2.89. A regular coffee is $1. The lattes are being introduced this month and will sell through mid-November.

The shares rose 0.5% to $97.78 at the close in New York. McDonald’s has advanced 11% this year, while the Standard & Poor’s 500 Restaurants Index has gained 19%. Starbucks has added 43%.

Starbucks Corp has sold 200 million pumpkin spice lattes in the nine years since it introduced them, said Alisa Martinez, a company spokeswoman.

The drink has the same number of calories as McDonald’s offering and a 16-ounce one sells for $4.55, on average. The Seattle-based company, which has about 11,200 US cafes, also sells salted-caramel mochas, hazelnut lattes and is introducing new bakery items nationwide.

McDonald’s may be able to steal some Starbucks customers because Americans are focused on finding deals now and pumpkin has become such a popular flavour during the fall season in the US, Gordon said. “Everybody is doing pumpkin this fall,” Gordon said.