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Jun, 04 2015

Starbucks is planning to become the next McDonald\'s

Capturing millennials, defined by Goldman Sachs as anyone aged 15-35, and their children is key because they could become lifelong customers.

Starbucks, the global chain is planning to be next McDoanld’s, reported NYT.

The coffee chain is constantly introducing improved food offerings, according to a recent report by Deutsche Bank.

According to the report by the firm, the ore food offerings will increase sale at6 Starbucks.

"Starbucks is virtually the only large incumbent that can offer millennial parents the convenience of a (fast food chain) and food they would not feel guilty/embarrassed to feed to their kids," Goldman Sachs' analysts write.

However, traditional fast food chains are losing market share to up-and-coming establishments like Chipotle as millennial customers search for healthier options.

This shift in consumer mindsets puts Starbucks in a unique position to take over, according to a recent report by Goldman Sachs.

The coffee chain has been expanding its menu to include more food options such as sandwiches and salads. It has also added drive-thrus to many locations.

Starbucks has also been "steadily expanding kid-friendly snack options, such as organic fruit squeezes, organic food snacks, and organic Greek yogurt," according to Goldman Sachs.

Capturing millennials, defined by Goldman Sachs as anyone aged 15-35, and their children is key because they could become lifelong customers.

"With the continued expansion of the lunch platform and investments in both drive-thru and in-store throughput (Starbucks') advantages in these areas appear set to expand," the analysts write.

With more than 20,000 locations around the world, Starbucks also has the size and power to compete with McDonald's.

The fast food giant has more than 36,000 locations around the world. By comparison, Chipotle has 1,700.

McDonald's is struggling to convince parents that its food is healthy.

Families with a child age 12 or under represent 14.6 per cent of McDonald's customers today, down from 18.6 per cent in 2011, according to Technomic.

"Kids are more sophisticated," Mary Chapman, director of product innovation at Technomic, told Crain's Chicago Business in September. "They're not just looking for the Golden Arches and the toy."

Customers are demanding "great-tasting, high-quality food," and McDonald's needs to make changes to some of its core menu items to meet that demand, new CEO Steve Easterbrook said on a call with analysts Monday.

In a recent step in that direction, the company pledged to remove antibiotics and hard-to-pronounce ingredients from its chicken.  

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