They are after a bigger swig of the retail, brewed-coffee sales especially after the success of their new, premium coffee. The question remains whether cappuccino sippers will be interested in imbibing while surrounded by kids, kids meals, and construction workers in a hurry -- even if it is cheaper. And there is the obvious problem of store quality and consistency, it's one thing to teach someone to make coffee, another to make a good caramel macchiato -- training that Starbucks does amazingly well. I happen to like Starbucks coffee (sorry Jeromey) but I also know they are selling more than coffee. They are also selling escape and image, something McDonald's can't do, at least in the present store configuration.
The other side of this venture is old-fashioned, corporate warfare. McDonald's sees a chastened, and now vulnerable, Starbucks whose stock value has halved in the last year and who has dramatically slowed domestic store growth, which at its peak was 2,500 new stores a year (over 6 stores a day, a mind-numbing figure).
Personally, I think McDonald's could pull off the espresso move and not hurt Starbucks. It's not necessarily a crossover market.
The reality is as I have said, Starbucks to date has had no nation-wide competition. Dunkin Donuts is trying, 7-11 has their steady share of quick-coffee buyers, and McDonald's at present is low-fat competition. Starbucks created the U.S. coffee as a meeting/reading/relaxation concept and is king of the hill. Their current setbacks notwithstanding, they are here for a long while and are very, very profitable. Krispy-Kreme they ain't.
I like the McDonald's move, but my research uncovered one final question: Will we soon refer to them as Mickey D . . . caf ? Sorry.

