EagleTribune.com, North Andover, MA

February 5, 2007

Consumer Reports rates McDonald's coffee over Starbucks

By Chris Burritt , Bloomberg News

McDonald's Corp.'s coffee tastes better and costs less than brew from Starbucks Corp., Burger King Holdings Inc. and Dunkin' Donuts Inc., Consumer Reports magazine said.

"We compared the rivals with Starbucks, all in basic black - no flavors, milk, or sugar - and you know what? McDonald's beat the rest," Consumer Reports said in its March issue.

McDonald's Chief Executive Officer Jim Skinner introduced coffee made from 100 percent Arabica beans, the kind used at Starbucks, a year ago. The move helped drive 2006 sales up 9 percent, the Oak Brook, Illinois-based company said last month.

"I noticed the coffee is more consistently good-tasting than it was in the past," said Bob Hooper, a 74-year-old retiree having coffee with two golfing partners at a McDonald's in Greensboro, N.C.

Consumer Reports' "trained tasters" visited two stores of each company, the magazine said. McDonald's coffee was "decent and moderately strong," while Starbucks was "strong, but burnt and bitter enough to make your eyes water," the magazine said.

Starbucks roasts its Arabica coffee beans to "maximize the characteristics of each bean" on aroma, acidity, body and flavor, said spokeswoman Sanja Gould. The company's roasting methods haven't changed since its inception in 1971, Gould said.

McDonald's 31 percent increase in stock values last year outpaced Starbucks' 18 percent gain.

The Consumer Reports test found McDonald's coffee for $1.35, Burger King for $1.40, Dunkin' Donuts for $1.65 and Starbucks for $1.55. The magazine said the prices were "an average of what we paid for the closest thing to a medium cup."

The magazine said Dunkin' Donuts brew was "weak, watery and pricier than Starbucks. It was inoffensive, but it had no oomph." Burger King, meanwhile, served a beverage that "looked like coffee, but tasted more like hot water," the magazine said.

Dunkin' Donuts said in an e-mailed statement that it is "proud" of its "freshly ground, freshly brewed and freshly served" coffee. Burger King spokeswoman Edna Johnson didn't immediately respond to a voice-mail message left at her office.

McDonald's introduced the stronger coffee blend in February 2006, about six months later than analysts including UBS Securities LLC's David Palmer in New York had expected.

The company took enough time to make sure its 13,700 U.S. restaurants had the equipment and training to brew the new coffee properly, J.C. Gonzales-Mendez, McDonald's chief supply officer in North America, said in an interview. The company sells 500 million cups of coffee a year.

Starbucks' sales in the year through September gained 22 percent to $7.79 billion. The company reported a 22 percent sales increase in the three months through December. McDonald's had $21.6 billion in sales last year.

Consumer Reports is published by Consumers Union, an organization that independently tests anything from cars and washing machines to mutual funds. Its annual testing budget of about $21 million comes from magazine subscriptions and donations, according to the magazine's Web site.