To showcase the competitive analysis example of coffee shop, in this article we will be looking at the Philippine’s cafe industry and using McCafe and Starbucks as the subject.
The following are key areas to take note of in a competitive analysis:
Clearly define your goals for the competitive analysis. For example, you may aim to identify areas where your coffee shop can differentiate itself from competitors, assess customer service strategies, and understand the overall competitive landscape.
In this case, we are assessing the coffee shops industry in Philippines and assessing if the market leader is Starbucks or McCafe.
Compile a list of direct competitors, such as other coffee shops or cafes that offer similar products and target the same customer base. Additionally, consider indirect competitors, such as fast-food chains that also serve coffee or tea. This broader perspective will provide a comprehensive understanding of the competitive landscape.
Using secondary research such as Euromonitor or Statista, we are able to determine the following in Philippines:
For cafe operator entering the Philippines coffee industry, it gives them an overview of:
Direct competitors, e.g. if it is a chain, then it is 11% of the industry.
Indirect competitors, e.g. it gives them the categorisation of the competitors in the different segments and what their offerings.
This type of stats usually features the top 10 or 5 in the industry. It gives you an indication on the expanse of the industry and also the potential.
For example, in Philippines, it is possible for McCafe and Starbucks to have a total of more than 1400 outlets (and they are part of the 11% of the industry!
Most revenue stats are estimates, but they give you a glimpse on the impact of environment factors and competition in the industry.
Many say that “data is the new oil”, highlighting the importance of data and analytics. Using secondary sources such as Euromonitor or Statista helps you stay updated on the latest trends in the coffee shop industry. It allows you also to look for emerging consumer preferences, new beverage offerings, technological advancements, and changes in consumer behaviour. By staying informed, you can anticipate shifts in the market and adapt your competitive strategy accordingly.
The "things" you can get from secondary stats is non-exhaustive, thus setting up a perimeter on what you want to find is key to getting meaningful insights.
Thoroughly examine all aspects of competitors, including their position and association. And this can be expanded into menus, pricing, and the quality of their coffee and food products. Taking note of any unique offerings or special beverages they provide. Paying close attention to their pricing strategies and how they position their products regarding quality and variety.
In this case study of McCafe Vs Starbucks, it is interesting to note that while Starbucks has lesser outlets than McCafe, it has much higher sales.
McCafe Higher Number of Outlets = Not A Strength
Starbucks Lower Number of Outlets = Not A Weakness
Using this for SWOT Analysis
**SEMRUSH is a great platform to conduct a comprehensive SWOT analysis for your coffee shop and competitors. Assess their strengths, weaknesses, opportunities, and threats. This analysis will help you identify areas where your coffee shop can excel, uncover potential growth opportunities, and understand the challenges you may face.
Identify your coffee shop's competitive advantage by comparing it to your competitors. Consider factors such as location, branding, quality of ingredients, unique menu items, customer loyalty programs, and the atmosphere and ambience of your coffee shop. Determine what sets your coffee shop apart and how to leverage those strengths.
As shown in the earlier example on McCafe Versus Starbucks, the higher number of outlets (the Place advantage) is not giving McCafe the competitive advantage.
Using SEMRUSH to dig a little deeper, you noticed that the brand search on McCafe versus Starbucks shows the low brand awareness of McCafe as compared to Starbucks**.
**Note: While most people believe that people go to cafes to drink coffee, if you think back on your own consumption experience, it is something like this:
Thus, the awareness of the cafe or “top of the mind” is important when it comes to visit the cafe and consuming the products.
Moreover, a McCafe is very much associated with a McDonald’s, it might not have the appeal as a good place to hang out with friends. (JTBD).
Download the full Starbucks and McCafe report below
Evaluate Customer Service
The reason (JTBD) of going to a cafe is not a functional one (to get coffee) but a more emotional or social one (to hang out with friends), so service is a integral part of the product offerings. And should be analyse and consider in building up your competitive advantage.
Visit your competitors' coffee shops as a customer to observe their customer service practices. Assess staff friendliness, efficiency, cleanliness, and overall customer experience. Additionally, gather customer feedback from review websites, social media platforms, or surveys to gain insights into their strengths and weaknesses.
In the case of McCafe Versus Starbucks, the numbers showed that the brand awareness of Starbucks is a possible reason why Starbucks has higher sales despite the lesser outlets. In our opinion, the “Starbucks experience”, the better customer service customers enjoyed at Starbucks might played a part in retaining customers as well.
Use the insights gained from your competitive analysis to make informed strategic decisions. Determine how to differentiate your coffee shop from competitors, enhance your customer service practices, refine your marketing efforts, adjust pricing strategies, or introduce new offerings based on your competitors' strengths and weaknesses.
From here, it is recommended that you build up your strategy using tools such value proposition canvas and Business model Canvas. Access and try build your coffee shop strategy using the free templates provided below.
Free Value Proposition Canvas Template
Free Coffee Shop Business Model Canvas
In this competitive analysis example for coffee shop, we look at the cafe industry in Philippines focusing on two titans of this industry - McCafe and Starbucks.
If you are looking for more information, simply click on the link above to access more reports, lectures and analysis on the food services and coffee shop industry. Or, drop us a message below to have chat to find out more on how we can value add in your cafe building journey (including one free market report)
Learn more about the event on The Power of Market Research organised by Alumni of Adelaide University.
**Gain insights into Singapore Industry with a free F&B industry report valued at $495.
See you on 24 August 1630 hr. (Sign up below)
Free tickets code: adelaide0823
Starting a coffee shop?: Free Cafe Setup cost Calculator
OCM (OnCoffeeMakers.com) was started in 2007 with the first webpage about coffee machines. And for a number of years, we focused on helping people find their desired coffee machine (we still are helping folks with that! So, if you are looking for coffee machines for office or restaurants - check out the link).
In 2010, we started getting enquiries on restaurant marketing and we start to help food and beverage brands with their marketing. Below are campaigns and events that we have done over the years:
OCM's campaigns: F&B Marketing Ideas by OCM
OCM's Events: F&B Industry events by or with OCM
Check out this restaurant marketing guide to learn more about the many campaigns and companies we have worked with.
Since then, we have also created many marketing workshops and classes for the F&B industry. Many of these modules are still running in tertiary institutions such as Temasek Polytechnic Skillsfuture Academy and also ITE College East COC classes, below are some snippets of our lectures and workshops:
OCM’s F&B workshops: Food and Beverage Marketing Lectures | Workshops - click to watch classes on customer journey map, JTBD and more.
So, if you are looking for industry practitioners to help you scale your coffee or F&B businesses, do drop us a message or book an appointment. Do also check out our various social media platforms on regular F&B and coffee market updates:
For regular coffee (F&B) related videos: OCM Youtube
For Daily Coffee Inspiration (fun coffee content): OCM IG
For insights into the coffee (F&B) industry: OCM LinkedIN
PS: For the coffee lovers, we continue to share coffee articles (and videos) and have also started a free coffee class section (with free online coffee training supported by coffee partners).