April 30, 2013
Can McDonald’s win the Coffee War? Not a chance.
Without a doubt, if there was a Marketing Hall of Fame, McDonald’s would be a first ballot inductee along with Disney, Apple, Nike and Coke. But, can they win on Coffee. Whenever I’m in front of an audience, I name a brand and say give me the first word that pops in your mind. When I say McDonald’s, I get about 30 different answers–kids, Ronald, Fries, Big Mac, family, etc. I end up facilitating at the front of the room like it’s a brainstorming session. When I say the word Volvo, about 90% of the audience smiles and says “Safety” like they’ve passed their Calculus final.
But here I sit, undercover at your local McDonald’s. This Mcdee’s has been remodelled as many have to be more of a “cafe”. There’s a little bit of wood, a fake fireplace, two giant screen TV’s, acoustic music playing and some funkier chairs. But it’s just after noon here, and there’s about 40 people in the “cafe”. Here’s my current estimate: 14 high school students, 8 college students, a construction crew of 4 guys in bright vests, 6 toddlers, 6 moms, 2 women “having coffee” and me.
One other odd observation. I have a great view of the entire restaurant right now. AND I CAN’T SEE THE GOLDEN ARCHES ANYWHERE. Isn’t that one of the most recognizable logos ever? This feels odd, so let me get a closer look and go over to the counter. It must be somewhere. Here’s a photo of the front counter: can you see it? Ok, no arches.
Can McDonald’s Beat Starbucks?
Let’s use the model below that looks at the five connections a brand has to make and compare McDonald’s to Starbucks.
Brand Promise: McDonald’s offers a really good tasting cup of coffee. In blind taste tastes, McDonald’s wins. Starbucks offers an escape from your busy hectic life. You can order in Italian (Grande), the cool 23-year-old college kid knows your name and what you drink, you can sit in luxurious leather chairs, along with other people also trying to escape their busy lives, you can have an amazing Scone or cookie and you can have a cup of coffee. OK, you can tell I’m being sarcastic. But are you starting to get that people aren’t going to Starbucks just for the coffee? It’s an experience, not a product. Let’s go 1-0 for Starbucks.
Strategy: McDonald’s caters to every demographic from 2 years old having their kids meal and playing in the play land for hours to college students wanting a Big Mac on the way to the bar at 11pm and grandmothers having a coffee and a muffin at 10:15am. They have something for everyone. And now coffee. Starbucks specializes in coffee, with a trained barista that can customize your favorite latte. Barista’s are usually so proud of their experience at Starbucks, they proudly display it on their resumes. To show their commitment to the Barista experience, Starbucks systematically closed down every Starbucks for a day to ensure everyone was making it right. I’m going 2-0 for Starbucks.
Story: I have to give it to McDonald’s. They launched a great outdoor campaign absolutely slamming Starbucks with the Fourbucks is Dumb. I loved it. But here I sit in a McDonald’s and the price of a latte is $3.29. You’re right McDonald’s. It’s not four bucks. It’s 3.29. I get to save 71 cents to sit with screaming toddlers and depressed teenagers that look at you funny. And Starbucks has a few ads here and there, but advertising isn’t really their thing. Every time that your friend says “let’s meet at Starbucks” it’s an ad controlled by word of mouth. Most recently, Starbucks has started to slowly and quietly dominate the social media space. Tough call, but word of mouth endorsements from friends always beats a billboard, even if it’s a great billboard. I’m going 3-0 Starbucks.
Freshness and Innovation: McDonald’s has done something very smart with free coffee for a week or even up to 15 days a few years ago. They are leading with their strength. However, the menu is small. It’s still early for them, but they need to show a bit of experience. But Starbucks has created some amazing deserts over the last few years and has had a lot of success behind their most recent blonde launch. Let’s give this one to Starbucks and it’s now 4-0.
Experience: Sorry, let me just take a break here. My butt is really killing me from sitting on these plastic chairs. The teenagers are complaining about the Math exam they just wrote and one of the toddlers just threw her fries at her mom and is now rolling around on the floor screaming. And Starbucks is an escape from all this. Thank god. I have teens at home. I went through the toddler stage. And my limbs could use a nice comfortable chair right about now. I’m going 5-0 Starbucks.
Here’s the thing. I’ve never had a cup of coffee in my life. And yet, I go to Starbucks about 40 times a year, mainly to meet up with friends. And I love it. Out of these 5 connections, the most important to me seems to be the experience. The coffee has to be good. But the experience has to be exceptional. And the McDonald’s experience which I’m living right now is certainly lacking. I can’t even hear the acoustic music. God I need some peace and quiet.
The original question I asked was “Can McDonald’s Win the Coffee War?”. They’ll steal share, just by sheer traffic already going through their stores. But, I’m changing the question to “Does McDonald’s know what’s important to Coffee Drinkers?”
And please put back the arches. Never be embarrassed of who you really are.
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About Graham Robertson: The reason why I started Beloved Brands Inc. is to help brands realize their full potential value by generating more love for the brand. I only do two things: 1) Make Brands Better or 2) Make Brand Leaders Better. I have a reputation as someone who can find growth where others can’t, whether that’s on a turnaround, re-positioning, new launch or a sustaining high growth. And I love to make Brand Leaders better by sharing my knowledge. I’m a marketer at heart, who loves everything about brands. My background includes 20 years of CPG marketing at companies such as Johnson and Johnson, Pfizer Consumer, General Mills and Coke. My promise to you is that I will get your brand and your team in a better position for future growth. Add me on LinkedIn at http://www.linkedin.com/in/grahamrobertson1 so we can stay connected.