McDonald's is making serious inroads in the coffee wars, while Dunkin' Donuts and Tim Hortons are rapidly expanding.
Take a quick drive on a weekday morning through Needham, Mass., a typical suburban community outside Boston, and you'll see hordes of commuters queuing up for their morning joe. A Dunkin' Donuts that opened a few years ago along the main drag is the busiest spot, followed by a McDonald's (MCD) that serves Paul Newman's organic coffee for free to early risers. The least busy spot? A Starbucks (SBUX) across from one of the town's four commuter rail stations.
Once the undisputed king of premium brew, Starbucks is suddenly besieged by tough competitors. McDonald's, the $22 billion-a-year restaurant Goliath is probably the biggest threat. Then there are Dunkin' Donuts, expanding under a trio of buyout companies that took the company private last year, and Canadian invader Tim Hortons (THI), growing in the lower 48 thanks to a fresh capital infusion from its U.S. initial public offering in March, 2006.
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