In 2008, with the economy in a slump, Starbucks found itself in unfamiliar territory, having to close around 1,000 underperforming stores.  Conventional wisdom dictated that budget-conscious consumers would cut back on their pricey daily latte.  Fortunately, unlike Radio Shack, Starbucks sold addictive products and customer traffic was successfully transitioned to other locations. Fast forward to 2011, the economy yet to recover, McDonald’s launches McCafé nationwide, selling lattes and cappuccinos for half of Starbucks prices. Backed with a hundred million dollar ad buy and free coffee giveaways, McDonald’s was sure to gain a share of consumers’ daily coffee purchases.  While McDonald’s proved successful at selling McCafé beverages as add-ons to their existing customers, most Starbucks customers found the drinks too sweet.  The massive ad launch to support McCafé caused consumers to drink more coffee in total, resulting in improved coffee sales at other chains like Dunkin Donuts and Panera as well.

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Data sourced from monthly Verbatim datasets from 2008-2010