Starbucks and the McDonaldization of French Pastries

 

Starbucks did the same thing to the coffee house that McDonalds did to hamburger joints.

It took a fragmented food and beverage vertical and consolidated it by refining operational efficiency, quality controls, predictability and calculability in order to scale.

Starbucks McDonaldized the coffee house.

The Starbucks move to buy La Boulange is also reminiscent of a more recent McDonalds play.

In 1998, Chipotle Mexican Grill had 16 restaurants all in a confined geographical region (Colorado) when $MCD came in and invested.

$MCD infused similar properties mentioned above (efficiency, controls etc) and scaled Chipotle by over 30 fold from 16 to 500 storefronts across the US in just 8 years from 1998 to 2006 before spinning the business back out again as a public company.

Home run and amazing work that Henry Ford himself would have been proud of.

Presently, La Boulange has 19 stores all in a confined geographical location (California) and I am sure Schultz and co. have a similar plan.

They will apply their own McDonaldization expertise and scale the brand profitably taking it from under 20 locations to several hundred in less than ten years.

In some ways its even better than the $MCD$CMG play because, while there was zero complementarity between burgers and burritos, coffee and pastry go together splendidly. This will spur cross pollination and product marketing possibilities along the way.

The McDonaldization concept was originally modeled by ┬ásociologist George Ritzer in the early 90s and his book The McDonaldization of Society is an important read. For this post, I did not get into the less flattering social implications of Dr Ritzer’s work.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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