Subway Heats Up Coffee Wars

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Subway Heats Up Coffee Wars

MILFORD, Conn. -- Adding more heat to the coffee wars, the Subway sandwich chain confirmed it will begin testing Starbucks-owned Seattle’s Best Coffee at 1,900 locations starting in January, according to a report by Nation’s Restaurant News.

Subway officials did not offer details on the effort. However, Starbucks officials said the test stores will offer brewed Seattle’s Best Blend; Henry’s Blend; and 6th Avenue Bistro Blend in 12- and 16-ounce sizes. The test is scheduled to run for six months in the U.S., though specific markets have not been named, according to Starbucks.

The potential partnership with Subway would give Starbucks Corp. a chance to win back quick-service consumers who may have made the switch to McDonald’s coffee because of its lower price tag. It would also give Starbucks a chance to compete head to head with McDonald’s new espresso-based drinks, as both Subway and McDonald’s boast tens of thousands of units each, the NRN report noted.

McDonald's has been rolling out higher-end beverages in an attempt to undercut Starbucks’ market share, and the chain’s officials have said they expect an incremental $1 billion in sales when all U.S. stores sell the upgraded coffee and other drinks next year.

McDonald’s also utilized marketing efforts that attack Starbucks’ reputation as a high-brow brew. In the Seattle area, where Starbucks is based, McDonald’s franchisees reportedly have erected billboards with slogans such as "four bucks is dumb," referring to the higher price of Starbucks' coffees, and "large is the new grande," making fun of the coffeehouse chain’s Italian menu lingo. There also have been online efforts, like, according to Nation’s Restaurant News.

Starbucks officials, though, have refused to engage in such attacks, arguing their customers are loyal because Starbucks offers a coffee "experience" not found at McDonald’s.

Starbucks’ secondary Seattle’s Best brand is available in 550 namesake cafes across the country, as well as 6,000 foodservice locations, including hotels, colleges and airlines.