Wed, Jan
9
2008

McDonald's Attacks Russia During Winter. Or, Rather, Starbucks.

Wed, Jan 9, 2008

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I do have a confession to make. I have tried McDonald’s coffee and I was mildly impressed. It’s a decent cup of coffee that competes well with Tim Hortons. When you’re on the road, there’s no reason to nip into one of these drive-thrus and order one of these things. Just make sure you don’t spill any on your lap.

But this story just screams folly. McDonald’s, in its neverending quest to take on all-comers and lead in every market where there is a mouth attached, is seeking to take on Starbucks, by offering up barista-style lattes and cappucinos at its restaurants.

It’s entirely possible that McDonald’s might produce a decent latte, but unless McDonald’s is talking about setting up an entirely new chain of golden arches coffee houses (and they’re not; they’re talking about adding this to their current restaurants), they won’t ever have anything that approaches the quality of Starbucks.

Because Starbucks isn’t just about the liquid, it’s about the ambiance. Starbucks is a place where people relax. It’s about savouring the experience. It’s about soft lighting and music on the speakers. It’s about comfy chairs. How many people here expect to see comfy chairs show up in their local McDonald’s any time in the future? Anyone? I didn’t think so.

Indeed, I’ve heard it said that McDonald’s, like other fast food joints, deliberately overlight the place so that customers wolf down their food and get out. The restaurant thrives on volume, and that becomes a lot more costly to accommodate if that volume sticks around. Starbucks, like Second Cup and, to a lesser extent, Tim Horton’s, do a better job of keeping their customers in the store. Tim Horton’s might not have comfy chairs, but it does have its place as the Canadian meeting place. Meetings, by definition, take time.

Of course if this venture fails, McDonald’s should do just fine. They dominate in so many other fields of fast food that their profitability is unlikely to be killed by a failure to be more like Starbucks. But this is another example of the compartments of the marketplace. Sometimes thinking out of the box like this works. Other times, though, it’s just putting lipstick on a pig.


A Thought on the Proposed Carbon Tax

There’s been some raised eyebrows and cautious words surrounding recommendations by an independent committee that the government of Canada set up a carbon tax and trading scheme in order to meet its commitments to significantly reduce carbon emissions by 2050. Environment Minister Baird, in his usual… style, pooh-poohed the idea, saying “a new tax sounds like a Liberal idea to me

I agree with Scott Tribe, a silly comment, especially considering that Harper himself set up this committee, but it’s ultimately inconsequential. Baird is a lightweight, in my opinion, and I think most observers know that if they want to see some direction in the government’s environmental policy, they have to look higher at the prime minister’s office.

And there might be some ideas here. If Harper would engage in a little out-of-the-box thinking, he could perhaps improve his environmental record, with no net increase in taxes, while at the same time enhancing government efficiency. Here’s how:

Right now, the government has kindly slashed another penny off a cup of coffee at Tim Horton’s in order to bring the GST level down to a ridiculously low 5%. I’ve spoken before about the gross inefficiency and economic uselessness of this otherwise politically savvy move. The GST is a grotesquely costly tax to collect, and reducing its take reduces its efficiency and wastes a greater proportion of taxpayers dollars in the collection of the tax. I say, if you’re thinking of doing anything with the GST, either eliminate it altogether, or walk away.

There isn’t enough money in the coffers for Harper to get the political win of eliminating the hated tax that the predecessor of his party implemented, but along comes a proposal for a carbon tax to add a cost to industrial polluters that can either pay for the damage they do to our environment, or encourage them to find ways to mitigate or prevent that damage. Harper has concerns that such a tax would be a hamper to the economy, but not if it turns out to be revenue-neutral. The solution to me seems a simple but elegant one: eliminate the GST entirely and replace it with a carbon tax.

A carbon tax is a tax that people can get out of paying by making greener purchasing choices. There is no escaping the GST. Harper would be able to do something his two predecessors were never able to do, he’d be doing something for the environment, and the government could do away with the administrative costs of an inefficient tax. It seems win-win to me. Will Harper think of this?


On This Day

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