FOOD FIGHT

McDonald’s is close to losing its market cap throne to a coffee company

The world’s biggest burger flipper has every reason to keep an eye over its shoulder. One of its biggest competitors is catching up to it.

In the pitched battle between two of America’s most recognizable food companies, Starbucks is poised to overtake McDonald’s in the total market value of its outstanding shares. Since it went public in 1992, the coffee chain has experienced astronomical revenue growth, powering the value of its stock. The coffee company has seen at least 5% same-store sales growth worldwide in 26 of its last 28 quarters. Meanwhile, McDonald’s has been struggling to keep sales from shrinking.

Starbucks has been insulated for years from direct competition with many of its fast food brethren. That’s because it’s focused on selling beverages and some food. The others, including McDonald’s, are focused on selling food and some beverages. This is changing somewhat, as McDonald’s has been investing heavily in its McCafe brand, adding pumpkin spice lattes to its menu and upgrading to $12,000 espresso machines.

Across the fast food landscape, Starbucks now has the second-largest market capitalization position to McDonald’s—and one analyst says that world order is about to change.

“We believe that it is only a matter of time before Starbucks overtakes McDonald’s as the largest market cap restaurant stock, although likely not in 2017,” wrote Mark Kalinowski for Nomura in his Jan. 3 assessment of the company.

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