November 23, 2017

McDonald’s McCafe Coffee

McDonald’s McCafe – specifically the Iced Mocha and Iced Latte – are not so bad.

Latte's and Mocha's

Latte's and Mocha's

I am a self proclaimed food snob. When it comes to coffee, my preferences are:

1) Freshly ground Ethiopian Harrar in my cone filter coffee maker
2) The local coffee shop
3) A fancy chain like Starbuck’s
4) Other, just give me something that resembles that delicious nectar of the Gods

That is why, when caffeine deprived and driving back to Atlanta from Florida, I was looking for a Starbuck’s to fuel the journey. Unfortunately, there were none to be found. I finally broke down and went to McDonald’s for Other. I had the chance to try the Iced Mocha and the Iced Latte and they were surprisingly good.

Sure it took 5 times to get the person at the register to understand what I wanted to order (an Iced Mocha and Iced Latte… no half foam, non-fat, blah, blah, blah … just the thing on their menu). I also felt a little guilty ordering after the 8 year old, rural Alabama boy in front of me had just asked his mom, “Why would anyone order coffee in the afternoon? That would be weird.” And, it took 2 employees about 10 minutes at the magic Mcdonald’s one push coffee barista to make the drink – apparently the 4-stirs is a critical part of the process. But the drink was good. An much less expensive than Starbuck’s.

So how does this fit into Community Cultivation? Well, first, McDonald’s is everywhere so they are part of most communities. But let’s get more specific with the CC: Scorecard.

  • Promotions – McDonald’s is promoting the hell out of it, as they do with everything, but with a little tongue and cheek advertising. They know people are gaining a taste for fancy coffee drinks and that the public’s view of them is as a low cost purveyor of fast food. They bridge this gap with delicious shots of their beverages combined with jabs at the “fancy” drink names, discussing how party changes to parte’ and debate transforms into debate’ with this added elegance.
  • Leveraging – not so much in this metric.
  • Audience – Here is the huge one. Companies like Starbuck’s made coffee drinking a widespread part of American culture. Coffee shops and these national chains were capturing the top dollar tiers of the market, but that leaves a lot of room to grow. Not wanting to leave money on the table, companies like McDonald’s and Dunkin Donuts introduced premium coffee to improve their footing on lower dollar tiers and began a push to the middle. Starbuck’s countered with reduced price coffee (Pike Place). So here we are, a battle is brewing (come on, that’s funny) … and McDonald’s is ubiquitous. Who will get the middle?
  • Connect – McDonald’s has a huge budget to promote and they are using all of their channels to try to connect with patrons about their new offering.
  • Entice – good coffee that is cheap and easily found. Enough said.
  • Success – POS data on sales provides great feedback on the effectiveness on the new product line.
  • Simplify – Well, this is not great yet – as witnessed in the 10 minutes it took to get my beverage. They do have the one button magic barista machine which should make this easy, but they need more training. Their inventory already includes coffee, milk, ice, chocolate and caramel so they didn’t increase the number of SKU’s, they just added a new piece of equipment. Not too bad if it adds to the bottom line.

Overall, I think Mcdonald’s might have a winner. Especially considering, with the state of the economy, they are one of the few companies that has increased revenue. In economic-speak, McDonald’s would be considered an inferior good (no offense Ronald, it’s an academic term) where demand increases as patrons’ incomes fall, but if their McCafe’ is viewed as a substitute good that is considered comparable to more expensive offerings by competitors, well that just captures market share. Holla!