McDonalds $100M Ad Campaign & McCafe Roll Out
By now I would not be surprised if nearly all of us have seen a new ad, heard a radio blurb, or have driven by a new McCafe, adorned with banners and ads for their new coffee and espresso beverages. Yesterday, McDonalds started the launch of a new $100M ad campaign that is promoting their McCafe rollout and an expanded espresso and coffee menu.
Nearly 11,000 out of their 14,000 locations in the US have a McCafe nestled inside and have undergone renovations. I read on Dow Jones NewsPlus page that most of the $100k McD's spent on the McCafe installs went towards the efficiency of their drive-thru systems and how the service time can be optimized while also offering a diverse new menu in addition to burgers and fries.
So how does this effect the "specialty" coffee retailer and indy coffee shop owner?
In my opinion, McDonalds is very optimistic if it plans on becoming a "specialty" coffee destination, as the quality of the espresso and coffee it serves is on par with the quality of their food. This is a given, and I don't think McD's is trying to market their drinks as being better on a quality level, but more so on a price point that meets the needs of consumers who may be searching out a deal. Also, I don't see the majority of their McCafe business coming from "new" customers, but more so from existing McDonalds patrons who may add a latte now to their usual breakfast combo meal. It seems they have found a profit center with a high margin, to increase sales and are capitalizing on it.
Also, I mentioned earlier that most of the McCafe efforts were put into the drive-thru portion of the store. This seems cohesive with the idea that McDonalds is not trying to become the "third place" coffee house that Starbucks has tried to position itself as for decades. McCafe's have put effort into the interiors of the McCafe to make them more comfortable, rustic bronze wallpaper, wood accents, tile, etc. but they have a dubious task of changing the consumers perception of McD's as an upscale establishment across the board in my opinion.
I can see this roll out effecting some business for drive thru coffee shops (and inline stores in some cases) that are not focused 100% on quality. This is nothing new. In today's specialty coffee industry, as a retailer you must do everything right. Offer a great product, great customer service, great ambiance and branding, and most important of all, know how to operate and run a sustainable and successful business.
Over the past 8 years I have seen an escalation of quality focused coffee bars opening up and immediately doing well. It has become even easier to differentiate yourself as a retail from your competition of other mom and pops, the chains and ... now ... Dunkin Donuts and McDonalds.
Similar to great restaurants, those retailers who focus on great customer service, professional training programs, excellent coffee and quality menu items will be in a category of their own. The silver lining is that with the exposure and customer base McDonalds has, they will for sure be selling mochas and lattes to customers who may have yet to try anything beyond a flavored coffee, and we will see the demographic of espresso beverage drinkers increase. Similar to how we sometimes thank Starbucks for broadening the market and developing new markets, McDonalds has this ability and it will happen quick.
McD's has impeccable timing as well ... with the "economic downturn" and a country obsessed now with cutting back and not spending money, the idea of saving a buck seems appealing to many. However, the consumer who is used to having a great latte each day will learn very quickly that you get what you pay for. A mocha made by an untrained barista on a super automatic machine in 44 seconds will not taste like one made from fresh roasted coffee beans, high end chocolate, fresh velvety milk from local dairy and served by a professional who understands the chain of events that coffee has traveled thru to get to that (biodegradable) to go cup.
My advice is to always serve your coffees with a goal of perfection. CHARGE MORE than Starbucks and McDonalds, as your serving a far superior product and at only $1 or so more a cup, you are still serving an affordable luxury. Let's let the big guys battle it out, but together we need to take this as an opportunity to truly separate the "specialty" coffee retailers from the caffeine slingers looking to capitalize on this high margin industry.
Would love to hear your thoughts and continue this discussion to see how the "specialty" industry, who each of us understand our markets better than a corporate giant, can educate our consumers on why they should buy from us.
- Matt
Nearly 11,000 out of their 14,000 locations in the US have a McCafe nestled inside and have undergone renovations. I read on Dow Jones NewsPlus page that most of the $100k McD's spent on the McCafe installs went towards the efficiency of their drive-thru systems and how the service time can be optimized while also offering a diverse new menu in addition to burgers and fries.
So how does this effect the "specialty" coffee retailer and indy coffee shop owner?
In my opinion, McDonalds is very optimistic if it plans on becoming a "specialty" coffee destination, as the quality of the espresso and coffee it serves is on par with the quality of their food. This is a given, and I don't think McD's is trying to market their drinks as being better on a quality level, but more so on a price point that meets the needs of consumers who may be searching out a deal. Also, I don't see the majority of their McCafe business coming from "new" customers, but more so from existing McDonalds patrons who may add a latte now to their usual breakfast combo meal. It seems they have found a profit center with a high margin, to increase sales and are capitalizing on it.
Also, I mentioned earlier that most of the McCafe efforts were put into the drive-thru portion of the store. This seems cohesive with the idea that McDonalds is not trying to become the "third place" coffee house that Starbucks has tried to position itself as for decades. McCafe's have put effort into the interiors of the McCafe to make them more comfortable, rustic bronze wallpaper, wood accents, tile, etc. but they have a dubious task of changing the consumers perception of McD's as an upscale establishment across the board in my opinion.
I can see this roll out effecting some business for drive thru coffee shops (and inline stores in some cases) that are not focused 100% on quality. This is nothing new. In today's specialty coffee industry, as a retailer you must do everything right. Offer a great product, great customer service, great ambiance and branding, and most important of all, know how to operate and run a sustainable and successful business.
Over the past 8 years I have seen an escalation of quality focused coffee bars opening up and immediately doing well. It has become even easier to differentiate yourself as a retail from your competition of other mom and pops, the chains and ... now ... Dunkin Donuts and McDonalds.
Similar to great restaurants, those retailers who focus on great customer service, professional training programs, excellent coffee and quality menu items will be in a category of their own. The silver lining is that with the exposure and customer base McDonalds has, they will for sure be selling mochas and lattes to customers who may have yet to try anything beyond a flavored coffee, and we will see the demographic of espresso beverage drinkers increase. Similar to how we sometimes thank Starbucks for broadening the market and developing new markets, McDonalds has this ability and it will happen quick.
McD's has impeccable timing as well ... with the "economic downturn" and a country obsessed now with cutting back and not spending money, the idea of saving a buck seems appealing to many. However, the consumer who is used to having a great latte each day will learn very quickly that you get what you pay for. A mocha made by an untrained barista on a super automatic machine in 44 seconds will not taste like one made from fresh roasted coffee beans, high end chocolate, fresh velvety milk from local dairy and served by a professional who understands the chain of events that coffee has traveled thru to get to that (biodegradable) to go cup.
My advice is to always serve your coffees with a goal of perfection. CHARGE MORE than Starbucks and McDonalds, as your serving a far superior product and at only $1 or so more a cup, you are still serving an affordable luxury. Let's let the big guys battle it out, but together we need to take this as an opportunity to truly separate the "specialty" coffee retailers from the caffeine slingers looking to capitalize on this high margin industry.
Would love to hear your thoughts and continue this discussion to see how the "specialty" industry, who each of us understand our markets better than a corporate giant, can educate our consumers on why they should buy from us.
- Matt
Replies to This Discussion
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Permalink Reply by laurent on
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Another bad day for Slow Food... David Vs Goliath? Sometimes i fear it's difficult to educate people, we're just too few against Taste slavers...
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Permalink Reply by dean cycon on
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Dean here. I would immediately issue The Great McDonald's Challenge in all of your cafes. Ask customers to bring in a full McD espresso drink and either: 1. Pour it out and give the customer a free drink, along with why yours is superior, or 2. Offer to nuke (microwave) their drink and give them yours to compare it to. Have fun with this, don't take it too seriously, that only adds credibility to what they are doing.
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Permalink Reply by Eric S. on
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I have been repairing the Franke Sinfonia machine for McD's about 6 months now. That being said I would like to predict a new plague of some sort is soon to follow due to the conditions some of their machines are in. This is not a rip on Franke by any means, what they do they do well, but if a machine is not cleaned...well I'll move on.
I do believe in the end we will all benefit from what McD's is doing. The people who purchase something from McCafe are not currently 'our' customers. They will try these drinks, like them, and think happy happy thoughts. Then one day while out walking past the cafe you own, or work at, they will do something they wouldn’t have done before. They will come inside and try your espresso drinks because they feel more familiar with the products you offer. It is then up to you to impress and educate them on what espresso truly is, dazzle them with those crazy designs you create on top, and most importantly BLOW THEIR MIND with the quality and taste.
This could be one year down the road or it could be five years but I believe this will happen.
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Permalink Reply by Alicia Noland on
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I agree, most of my customers already know the difference between our drinks and those of Starbucks. I hope this gives coffee in general more exposure (especially here in Salt Lake City!).
Kaldi's Coffee House, Columbia said:I have been repairing the Franke Sinfonia machine for McD's about 6 months now. That being said I would like to predict a new plague of some sort is soon to follow due to the conditions some of their machines are in. This is not a rip on Franke by any means, what they do they do well, but if a machine is not cleaned...well I'll move on.
I do believe in the end we will all benefit from what McD's is doing. The people who purchase something from McCafe are not currently 'our' customers. They will try these drinks, like them, and think happy happy thoughts. Then one day while out walking past the cafe you own, or work at, they will do something they wouldn’t have done before. They will come inside and try your espresso drinks because they feel more familiar with the products you offer. It is then up to you to impress and educate them on what espresso truly is, dazzle them with those crazy designs you create on top, and most importantly BLOW THEIR MIND with the quality and taste.
This could be one year down the road or it could be five years but I believe this will happen.
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Permalink Reply by Wayne Phillips on
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This Mc D campaign should increase sales of all coffee in the USA and with the rising waters all outlets will benefit. Send them a letter of encouragement and thanks
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Permalink Reply by Leslie Keyser on
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They were using a Melitta Cafina C5 where I stopped yesterday - the prom princess just pushed the buttons, took it from the machine and slapped a lid on it - no latte art, not even a smile.
Brady said:VFA_Expres New York said:I am curious to know which superautomatics they are using, and whether individual McCafes are allowed to choose their own equipment.
By the way, I have never set foot in a Starbuck's - and since they started going superautomatic, I really never will!
The one's I've noticed have all been Franke.
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Permalink Reply by Matt Milletto on
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You mean it didn't look like the one on their billboard? :)
and what is it doing in a ceramic cup?
Leslie Keyser said:They were using a Melitta Cafina C5 where I stopped yesterday - the prom princess just pushed the buttons, took it from the machine and slapped a lid on it - no latte art, not even a smile.
Brady said:VFA_Expres New York said:I am curious to know which superautomatics they are using, and whether individual McCafes are allowed to choose their own equipment.
By the way, I have never set foot in a Starbuck's - and since they started going superautomatic, I really never will!
The one's I've noticed have all been Franke.
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Permalink Reply by Pablo Castaneda on
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Mccafe started in Guatemala guys, this new concept for you has been in Latin America for over 4 years now and let me tell you at least down here they do have good quality coffees and beverages. They buy good coffee and people like the concept indeed, an independent area from the restaurant.-
Mmmm well another thing is that our Mcdonald's rest. down here are first class rest. Nothing compare at all with the USA bad quality service and food. Here when you say I'm going to McCafe an status role is played.- Another interesting matters is that as Starbucks will never be able to come to Guatemala (why? cause we defend our territory) they noticed Guatemalans are aware of the Starbucks concept to hang out and have wifi while you drink your coffee and chill.-
I don't know what is the concept in the USA, hope to see it when I go to Coffee fest Vegas, but down here is a fancy concept indeed.-
Pablo
KafesGuatemala
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Permalink Reply by Corey Roberts on
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That's ridiculous. We all think it's fun to sling mud at Starbuck's, but the two merging is not plausible.
David Sierra said:Do you think that eventually they will will buy out Starbucks and the two shall become one? Interesting times...
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Permalink Reply by Jeff Harrison on
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I often go to McDonalds for lunch from my job at a coffee roaster and for a while they were giving away free samples of their coffee so I could not resist bringing a cup back with me and putting it up to the real test of specialty coffee.... Cupping.
Watery, with faintly coffee like notes of commercial roasted Brazil and low grade central American coffees. What can I say it is in layman's term NOT specialty coffee. It is better that what they had before, but when you have to add sugar and cream to your coffee to make it palatable it is not what I am expecting when I get a cup of coffee. When you get a cup of coffee you should be able to sip it, enjoying the subtleties of the flavor, and notice how those flavors change as the cup cools down over time. Coffee, good coffee, is not meant to be tossed into a 64 ounce big gulp cup and drank as fast as possible before you realize how lousy what you are drinking actually is.
So, yeah, I tried thier coffee, I suppose I should see what there espresso-style-drink-things taste like, although being lactose intolerant I kind of doubt that is going to happen any time soon. As for what they are getting for their 100 million dollar investment into the specialty coffee industry I think what they are accomplishing is nothing more than to lower the bar all around, which means that we are going to have to fight back by proving that a latte is more than just a delicious drink if it is served with either a smile from a barista who cares, or a sneer from a barista who thinks that you are nothing more that a petty waste of his time when he is trying to finish his screen play (depending on the flavor of your shop.
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Permalink Reply by Chris Janak on
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Pretty new to the BX and almost no experience as a barista, but I thought it would be interesting to give my take on the effect Starbucks has had on coffee consumption here in Mexico.
Mexico is one of the giants in the coffee producing world, yet as consumers have ranked very low. Before the arrival of SBUX, palates seemed to favor the instant, milky, sugary stuff...NESCAFE, and that was probably if there was no atole. It amazes me to this day how little coffee is consumed by some origin countries.
The first Starbucks opened in Mexico City around Sept of 2002. There are now over 250 franchises throughout the country and another 60+ planned to open for business this year. As Mexico has experienced growth in its middle class and a fairly stable economy over the last 6 years, nationals seem to be picking up on coffee trends started in the States years ago. It is hard to go to any city here without seeing the ubiquitous green circle logo in someone's hand. While maybe not the most comforting thought to many of the indies and professionals here on the BX; Starbucks, as it did in the States, is changing the way Mexicans experience coffee...I think for the better.
Mexico City, Guadalajara, Monterrey, Zacatecas, and many smaller cities and towns are just now creating a coffee culture in contrast to what the Starbucks and the Gloria Jeans have to offer. I don't know that this would have happened without coffee first being mass marketed as a desirable beverage by some giant company with a massive advertising budget and serious name recognition. I'm happy to see the population walk around with veinte lattes and grande caps, politics aside. At least their not drinking instant. While not a fan of those chainstores, they are important to the education of a public largely ignorant about coffee. Might not be the education you prefer but at least its moving them along.
Encouraging signs are the addition of many independent coffee shops springing up. Some open and fail, some open and serve water + mud. Many, however, are holding on and provide as good a cup and a hella of a more interesting atmosphere and sense of community than the chainstores. A barista culture is also growing and I attended my first Mexican Barista Championship in Mexico City last Sept. They came from different states of this rather large country. The winner was a woman. The first. She was excellent.
All the above may be redundant for many of you. What I think it means in terms of putting this in context with what Specialty Coffee retailers and baristas face up against McCafe's and Starbucks....What an opportunity you have ahead of you. History seems to be on your side, no? I think continued concentration on serving your best cup of coffee every time is key. Customer service may be more important than ever as newcomers to coffee by way of Starbucks or Mccafe one day stroll in your shop looking for something maybe just a bit more interesting. How are you going to be their best new educator? They may not be lining up out your door en mass anytime soon, but I like to think some of those queuing for the McCafe drive-thru are adventurers and explorers at heart. I hope that someday they are queuing for one of your cups.
Chris
San Miguel, Mexico
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Permalink Reply by Christopher Schaefer on
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There will be some level of "success" with this model (at lease here in these United States) due to consumer's base nature: convenience, convenience, convenience. That is yet one more obstacle that the "real" specialty coffee retailers have to hurdle. Product and customer experience quality certainly must be better than that of McD's "cafe experience" but that alone won't secure a consistent victory for any mom-and-pop retail shop.
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