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A report from the Wall Street Journal says McDonald's (MCD) is going to go all out in its attack upon gourmet coffee leader Starbucks (SBUX).

It's nothing new that McDonald's is growing its gourmet coffee business, but it's the first time they've let it be known that they're going to put coffee bars in every one of their 14,000 locations in the United States.

Not only will that challenge Starbucks, but may even be a larger challenge for Dunkin' Donuts. That's assumption is based on similar demographics of McDonalds and Dunkin' Donuts.

On McDonald's part, they say their strategy isn't an attack on Starbucks, but in response to consumer trends. Of course that partially true, as that's been the truth for some time. At the same time though, Starbucks' entry into the fast food market and drive through windows definitely were a competitive statement to McDonalds, so that's still part of the equation.

For Starbucks, I wonder if they're attempt to get a share of the fast-food business may have backfired on them, as their normal customer has gone down in educational and income levels. That would mean less sales and less of the type of original community and atmosphere at the stores.

The migration makes differentiation between the two not as pronounced as it used to be, and that is definitely an advantage for McDonald's.

Even so, the gourmet coffee market itself could expand through McDonald's efforts, and the result could be a bigger pie for everybody.

McDonald's expects the strategy to net them about $1 billion a year; not an insignificant amount when taking into account they have annual sales of about $21.6 billion.