– Faisal Laljee

Thanks for the comments. Agreed that comparing McDonalds to Starbucks is to some extent apples to oranges. I just find it to be a useful starting point for developing an investment thesis. You certainly wouldn’t want to buy the stock (or any other) based on one analysis.

I disagree, however, that the efficiency advantage is ephemeral. A cup of coffee will always take less time, expense and labor than a similarly priced burger. Unless you can increase the number of turns by an even larger rate the efficiency differential just is what it is.

And with average store sales in the $630,000 range (it is closer to $1 million for company-owned stores) I bet there is at least one doing $4 million somewhere.

I think something is missing in the analysis here. There is no recognition that as McDonalds spread into emerging markets, revenue per store has dropped. Starbucks has nowhere near the global presence and penetration that McDonalds has. A McDonalds in India or Russia is simply not going to generate as much revenue as a McDonalds in North America. During my university days 8 years ago, I used to be a manager at a moderate volume McDonalds restaurant in a suburb of Vancouver, BC. We could sometimes take in $1800 in a lunch hour with 15 crew working. Average daily revenue was approximately $7000. This works out to over $2 million per year. I know that we were close to the Vancouver full size restaurant average. The busiest stores would bring in $4+ million per year. I can’t imagine any individual Starbucks locations bringing in this much revenue.

So my point is, that as Starbucks penetrates markets like McDonalds has, average revenues will drop in the same fashion, affecting growth. Also the efficiency gap you mention will not be as large if you compare store performance within markets as opposed to looking at global numbers.