Mickey Mouse, Snow White, and ... Starbucks?
It's a deal between two iconic American companies, and it's a wonder it didn't happen sooner. Starbucks (NAS: SBUX) and Walt Disney (NYS: DIS) have announced that the coffee slinger will open its cafes in all of the Mouse's theme parks located in the United States. Given the sparse food and beverage options currently available in Disneyland and its brethren, the deal is clearly a win for both companies.
Terms of the arrangement were not announced, but since the two firms are savvy and opportunistic, it's safe to assume they were mutually advantageous. It's hard to imagine how either company could fail. Starbucks effectively becomes the monopoly coffee supplier in the parks, while Disney collects steady and probably lucrative rent from a popular tenant. Oh, and it expands its currently limited food and drink offerings in the process.
And of course, adult visitors to the park finally get a chance to acquire a caffeine buzz to give them the energy to take their kids around.
This isn't Starbucks' initial foray into supplying caffeine for Disney, but it'll be the first time it's advanced onto the grounds one of the company's parks. In 2009, it opened an outlet in the Disneyland resort in Paris; however, that store was in Disney Village, a section of the resort outside the amusement park itself.
The first Starbucks is slated to open this coming June in Disney's California Adventure. This implies some caution on the part of The Mouse. California Adventure is one of the less visited of the company's theme parks, taking in less than half the traffic of the original flagship Disneyland located just next door. It seems as if California Adventure will serve as a pilot market of sorts to gauge how popular Starbucks will be.
Selling java to the world
It's highly unlikely the pilot will nosedive. Although the California Adventure outlet will have to operate in the guise of the 1920s-style Fiddler, Fifer, and Practical Cafe (in accordance with Disney's strict doctrine on keeping in theme within its park sections), the store will unmistakably be a Starbucks. As such, there's every reason to suppose that it'll attract a big chunk of Adventure's crowds.
It's also nearly certain that the arrangement between the two companies will go global in a hurry. Again, this will be an obvious boon for both, since some of Disney's most popular theme parks are located abroad. Tokyo Disneyland, for example, is the No. 3 such attraction in the world, and foreign consumers love their coffee nearly as much as, or even more than, Americans do. Disney is only a shareholder or licensor -- as opposed to the sole owner -- in Tokyo Disney (No. 4 on the worldwide top 10 list) and Paris' Disneyland Park (No. 6), but it's very likely such places would be happy to get in on the Starbucks action.
New frontiers, no rivals
The deal also provides some good expansion possibilities for Starbucks, a company that has infiltrated nearly every corner of America and is running scarce of room to grow. Real estate is, of course, limited in Disney parks, but no matter. Amusement parks represent a niche loaded with potential, and there are others for the company to discover and fill.
This paces the company even more steps ahead of its most comparable rivals. Peet's (NAS: PEET) doesn't have anywhere near Starbucks' footprint or presence. Besides, as a relatively exclusive chain, it probably won't be setting foot in any amusement park in the near future, or ever.
Although McDonald's (NYS: MCD) has had some success in the specialty-coffee sphere dominated by Starbucks, it's always and forever identified with cheap, unhealthy food. Cheap and unhealthy is not the image Disney wants for its parks, so it's doubtful Mickey D. will make a deal with Mickey M. to battle Starbucks in those locales.
No, the coffee giant will win this big prize and put some money in The Mouse's pocket while it does so. Starbucks and Disney is a marriage that looks like an unbeatable union. It makes you wonder why the wedding didn't take place earlier.
McDonald's might be losing the Disneyland coffee fight, but it's winning big in many foreign markets. We've also identified two other American companies that will reap global rewards; find out their names by downloading our free report, "3 American Companies Set to Dominate the World."
At the time this article was published Fool contributor Eric Volkman owns no stocks mentioned in the story above. The Motley Fool owns shares of Starbucks and Walt Disney. Motley Fool newsletter services have recommended buying shares of Starbucks, McDonald's, and Walt Disney and writing covered calls on Starbucks. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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