Who doesn’t read cattlenetwork.com? An article posted there today cited comments from Jim Donald, CEO of Stabucks, about Ronald McDonald (no relation) and his newfound popularity from McDonald’s recent premium coffee success: Cattle Network – Connecting The Beef Industry Worldwide – Starbucks CEO Sees Benefit In Upscale Coffee At McDonald’s.

Mr. Donald says that he is not worried about potential competition from McDonald’s. Rather, he suggests that McDonald’s is helping Starbucks with the dirty work of feeding their customer acquisition pipeline — that McDonald’s customers are now more likely to migrate up to Starbucks’ “super-premium” coffee over time (note the judicious use of quotations). He also states they already see this effect taking place.

Given that Starbucks is now clearly mid-grade level in the world of retail specialty coffee, I wonder about the effect at the opposite end of their customer pipeline: i.e., what about all the former Starbucks drinkers who have since graduated on to better coffee? Whether they’re getting better coffee at home or through boutique cafés and smaller chains (with higher quality standards and none of the requirements to use only massive bulk coffee supplies for chain consistency), what customer attrition rate changes are Starbucks seeing at the upmarket end of the spectrum?

Since Starbucks dumbed down their equipment and their baseline employee skillset to meet their explosive growth needs in recent years, this is undoubtedly a dirty secret that few even in the corporation will share with each other. Because I can guarantee you that it is happening, and growing, without question.

UPDATE: June 9, 2007
As CEO, Jim Donald’s primary job is to fatten the stock price for Starbucks shareholders. His comments here seem really disingenuous now that Deutsche Bank Securities Inc. analysts are reducing their outlook on Starbucks’ share price due to competition from the burger guy in clown shoes: Starbucks may lose coffee drinkers to McDonald’s.