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.  

photo

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.

Slide1

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.  UnknownI 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.  

 

Follow me on twitter @GrayRobertson1

 

For a presentation on how to write a Positioning Statement, follow:

Other Stories You Might Like
  1. How to Write a Creative Brief.  The creative brief really comes out of two sources, the brand positioning statement and the advertising strategy that should come from the brand plan.  To read how to write a Creative Brief, click on this hyperlink:  How to Write a Creative Brief
  2. How to Write a Brand Positioning Statement.  Before you even get into the creative brief, you should be looking at target, benefits and reason to believe.   To read how to write a Brand Positioning Statement, click on this hyperlink:  How to Write an Effective Brand Positioning Statement
  3. Turning Brand Love into Power and Profits:  The positioning statement sets up the promise that kick starts the connection between the brand and consumer.  There are four other factors that connect:  brand strategy, communication, innovation and experience.   The connectivity is a source of power that can be leveraged into deeper profitability.  To read more click on the hyper link:  Love = Power = Profits 

Brand LeadershipI run the Brand Leader Learning Center,  with programs on a variety of topics that are all designed to make better Brand Leaders.  To read more on how the Learning Center can help you as a Brand Leader click here:   Brand Leadership Learning Center

Pick your Social Media vehicle and follow us by clicking on the icon below

linkedin-groups-large             images-1              facebook-logo

To reach out directly, email me at graham.robertson@beloved-brands.com

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.  Im 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.

15 thoughts on “Can McDonald’s win the Coffee War? Not a chance.

  1. Mary Rizza

    Thanks for your great “brand map” of McD vs Starbuck’s. You are right; at Starbuck’s, I am buying a superior experience, (although when I had a 3-year old, I defined a good experience as one that made my kid happy and entertained him for at least 3.5 minutes).
    Just to take a step back from your posit “Can McDonald’s win the coffee war?” for a moment, though: Why coffee? In my QSR past, I learned that growing alternate dayparts was a big deal. You cannot succeed in the Breakfast daypart with crappy coffee. The whole revamped coffee program investment will build breakfast traffic. The McCafe may be part of a branding process that creates the perception that the coffee has been elevated. Of course, massive product trial was also utilized to create awareness for the upgraded coffee launch. (Go big or go home. I’ve had clients that would launch a massive investment like this with a 25 cent coupon. LOL)A dual strategy: get more sales in Breakfast and build volume for that lovely high-margin coffee business.

    Reply
  2. Phan

    Graham, It’s still cool as usual whenever you contribute the artilce to marketing community !
    But just with sharing purpose, I may put the following challenge :May McDonald’s not aim at the coffee war? They may only want to win the combination (combo) in which coffee play a role exactly like Coke or Lemonade…another kind of drink in the combo. The point :”And please put back the arches. Never be embarrassed of who you really are.” I totally agree with you.

    Reply
  3. Melody

    I enjoyed this exploration on what MacDonald’s is doing, but have to wonder if they are really going after Starbucks or is it Tim Horton’s or Dunkin’ Donuts etc? In my experience I’m more inclined to pick up a McD’s coffee on the go then walk into another quick serve coffee place. Because they do still deliver on some of their brand promises – consistent experience, quality products, free wifi (a must while travelling) etc. I’m not sure who will win the coffee war, but I’m ok with trying them all out!

    Reply
  4. DImonchik

    Its all true, but have you ever tried to find a Starbucks while you travel on a highway? There is only few of them now (Talking about South East). MD seen like the only way to get at least something that tastes like a coffee, and there are everywhere.

    Reply
  5. Franchise Equity Group

    Over the past 20 years McDonald’s has been lead by people who don’t want to be “hamburger guys”. They desperately want to be “restaurateurs”. This is why, in the late 1990s management bought up a number of smaller, more upscale brands and the next team sold them off and has been trying to make the existing McDonald’s more like Starbucks. Your observation about the disappearing golden arches is very interesting.

    Reply
  6. Brett Huttman

    I would argue that while McD engages in skirmishes with Starbucks, the target is Tim’s. Free coffee at McD’s was aimed directly at consumers lining up at drive-thrus during the morning rush. And it led to considerable gains in adjacent categories for McD, both during and after promo periods. Starbucks may own the coffee experience, but McD is making inroads AND still rules QSR and all the trappings that come with it.

    Reply
  7. beloved brands

    Appreciate all the comments, and most people are arguing that McDonald’s is not going after Starbucks, and it’s just a QSR play. Or better yet, it’s just really a drive-thru win because 65% of sales go through the drive thru.

    So then the problem is not strategy, it’s the execution. Why waste money on putting in the fake fireplace and half way fixing up the restaurants? Why invest in almost changing the physical signage to McCafe? Why downplay the arches? Why take out ads that directly and aggressively target Starbucks?

    Why not directly target Tim’s not only on coffee but better/faster service. To me, Tim’s has a real growing weakness around service. I sense and I hear people complaining over the last 18 months. That would be something to exploit? Why not just focus on the drive thru, and invest your dollars are drive demand for the drive thru rather than re-vamping the entire store? The only people who seem to go in are seniors who just want the cheap coffee/muffin deal or kids to hang out at lunch hour.

    As for going after Starbucks, a good lesson is you can never go half way on something and expect anything. A fake fireplace and acoustic music, yet plastic chairs and screaming babies is going half way. Don’t bother.

    Reply
    1. Franchise Equity Group

      In part you’re right about Tim’s. This is why McDonald’s first major test of McCafe was the state of Michigan.

      Reply
  8. Michael David Gold

    Saw your post on Linked In. Nicely put. Well-analyzed. The only perspective I might be able to add is that McDonalds doesn’t really have to beat Starbucks at coffee to have a win here. All they really need is a good cup of Joe at a decent price and enough buyers to make it worth the trouble. Positioning against Starbucks wasn’t necessarily an attempt to unseat the market leader but rather just to get into the consideration set. To me, and strictly from a brand perspective, it looks like they have succeeded.

    Reply
  9. andrea

    Great post and presentation. McDonald’s WON’T win the coffee war, but their coffee is very good. Better than Tim Horton’s. I think that it’s Tim’s that they’re going after. On his way to work my boyfriend drives through McD’s for a breakfast burrito and a coffee.

    Tim’s needs to start “coffee-only” lines, like Shake Shack in New York has shake-only – or “food only”? – lines. It becomes a clusterfuck (I love that word) when most people in line just want their large double doubles but one person has ordered a toasted bagel and 24 assorted Timbits. An exclusive coffee line at McD’s might provide an incentive. I don’t imagine McD’s becoming synonymous with coffee – it’s not nor has it ever been part of their core brand – but I think they’re holding their own.

    Glad I caught this post in my LinkedIn feed. (Reminder to all of us bloggers to share our own work with our online networks.)

    Reply
    1. beloved brands

      THe coffee only line idea is a great one. My pet peeve at Tim’s when you have the two line ups to order, and then you end up in the same freaking line up anyway. It just creates road rage. Also, when there is only ONE HUMAN answering, why have the two lines.

      Reply
  10. Pingback: Can McDonald’s win the Coffee War? Not a chance. « Beloved Brands

  11. Brett Huttman

    I think Michael Gold is making the right point that to even play in the game is a win at McDonald’s. I don’t think many would argue that they are a market leader in QSR, so by making a visit to McD more of an experience, in fact, a destination, they make their real estate assets more valuable. Next time you venture to McD, look at the merchandising from the parking lot inward, and how they have strategically crafted their messaging at differing points. The “post-purchase” area, the seating zones, now entice consumers to linger and make additional purchases. A second coffee, an apple pie, etc. Increase traffic and increase purchases per consumer – there’s the win.

    Reply
  12. Helen

    I think McCafé is a great strategic choice as it targets a whole different group of consumers. I see it more as an “increase the market size” play versus “take share” play. In such a case, both companies can win and the competition is limited.

    Consumers that physically visit the café (vs Drive-through or quick serve) may be people who want the Starbucks-like experience but are ‘intimidated’ in a Starbucks environment, or the ordering process (even regulars get confused in the ordering when a new items pops on the menu), etc and feel more at home in an environment that they have been coming to for years which is easy, simple, and comfortable (and now a bit of indulgence for them with fireplaces, etc). As well, McD’s own’s their consumers’ mornings so having a strong product offering here also helps McD’s with cross-sell and pull-through traffic.

    For all the other comments mentioned, I fully agree with everyone above on the Starbucks experience, QSR benefits of McD that halos to McC, location, drive-through, ability to bring kids and not feel like one is being disruptive, product taste, etc.

    Reply
  13. Richard Adams (@fegroup)

    Too bad – after four years – the typical McDonald’s sells only a hand full of Starbucks type drinks a day. McDonald’s has spent billions and all they’ve proven is that McDonald’s customers are not interested in espresso drinks.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Protected by WP Anti Spam