Starbucks vs McDonald’s Why the Brand Matters More Than the Drink

Alex accidentally gave me one of the simplest real-world business examples I’ve used in a while.

We were walking through Meadowhall and he said he was just grabbing a drink from Starbucks.

I said I’d wait.

A few minutes later he came back with an Americano. I carried on walking and picked up a coffee from McDonald’s instead.

Nothing exciting so far. Just two coffees.

About 30 seconds after sitting down, it turned into the exact conversation we always end up having.

Price. Strategy. Branding.

Because this is one of the clearest examples you will ever see of why businesses do not always compete on price.

The numbers

• Starbucks Americano: £3.75

• McDonald’s Americano: £1.69

  
  

That is £2.06 more or roughly 122% higher for a very similar core product.

(And honestly… I prefer McDonald’s coffee)

So why are people completely happy to pay more?

Starbucks is not really selling coffee

Starbucks sells a feeling.

Think about everything that comes with the drink:

• The cup and logo

• The store design

• The lighting and music

• The idea of relaxing or working there

• The social media image

  
  

Scroll Instagram and you will see people holding a Starbucks cup like it is part of their identity. You almost never see someone posing with a McDonald’s coffee.

That difference matters!

Because customers are not buying the drink. They are buying what the brand says about them.

This is branding creating differentiation

In business, differentiation means making your product feel different even when the core function is similar.

Both coffees:

• Warm you up

• Contain caffeine

• Taste broadly similar

• Solve the same problem

  
  

But the perceived value is completely different.

Starbucks positions itself as:

premium, relaxed, lifestyle-led, personal

McDonald’s positions itself as:

fast, convenient, reliable, good value

Neither strategy is better. They are just targeting different customer priorities.

Why this lets Starbucks charge more

Because once a brand becomes part of the experience, price stops being the main decision factor.

Customers are not comparing:

• coffee vs coffee

They are comparing:

• experience vs convenience

  
  

So Starbucks does not need to win on price. It wins on perception.

This is called non-price competition but in simple terms it means:

If customers believe your product is different, you escape the price war.

The big business takeaway

Two businesses. Same core product. One charges 122% more.

Not because the coffee costs more to make. Because the brand makes it feel more valuable.

Questions to consider:

1. Explain why Starbucks can charge a higher price than McDonald’s even though the core product is similar.

   
   

2. To what extent is branding more important than the product itself in influencing customer choice in the coffee market?

Extension: Name a business in another industry that charges more than a competitor.Explain three branding strategies it has used to avoid competing on price.