McDonald’s, Your Neighborhood Café

After McDonald’s went all fancy-pants with its coffee last year, it didn’t take a lot of financial acumen to suspect that the news wasn’t good for Starbucks—especially after a much-publicized Consumer Reports panel preferred McCoffee over the Seattle chain’s product.

McDonald’s has now introduced the better—faster! higher! stronger!—coffee at two-thirds of its stores. And Starbucks is indeed feeling it. A Bloomberg story brings the numbers:

Shares of Starbucks, the largest coffee-shop chain, are down 24 percent in 2007, on track for their worst annual performance amid the slowest sales growth in more than five years at stores open at least 13 months.

A Wall Street blog headlines the news “The Death of Starbucks Growth.” The company, clearly trying to reverse the decline, is learning from its competitor: It is reviewing its longstanding policy of not marketing to children. (Although as a mother and analyst notes, a lot of those drinks aren’t exclusively for adults: “Take the Blackberry Green Tea Frappuccino, which is low on caffeine and loved by my four-year-old and one-year-old alike.”) Meanwhile, under the hallowed Golden Arches, same-store sales were up over 8 percent, a gain that was widely attributed to increased breakfast and, yes, coffee sales.