It could be lousy timing or a case of misusing a caffeinated
is hoping that its coffee can woo retail shoppers next year. The
world's largest burger chain is teaming up with
to sell packaged bags of its McCafe ground and whole-bean coffee
through supermarkets by early next year. It will also offer up
its java blasts as pods for single-serve machines.
As you can imagine, the decision to follow
into consumer packaged goods is being met with more than a
little derision. It's going to be potent late-night comedy
McDonald's serves a lot of coffee in the morning, but that's
because it is cheap, everywhere, and convenient for morning
commuters who need an infusion of joe but don't want to have to
get out of their cars.
"Gee, I wish I could make this at home," said no McDonald's
coffee sipper ever.
Starbucks succeeded in its push for bagged coffee and
eventually K-Cups because it's a beloved brand. Folks pay a
premium for it. Obviously, the same can't be said for McDonald's.
Folks pay a buck for a 12-ounce serving off the chain's Dollar
Menu & More, and customers will expect to buy bags of McCafe
for less than perhaps even house brands.
One lump or two?
Bulls will argue that it's incremental to the business, but even
that doesn't seem right. If McCafe fails at the packaged retail
level, won't that tarnish the coffee brand? If McDonald's and
Kraft fail to price the beans aggressively, won't it convey the
wrong value message to consumers? McDonald's is already smarting
at the store level. After a decade of consistently positive
same-store sales growth, it's coming off three consecutive
quarters of negative domestic comps. Even the company concedes it
has strayed from its value message by pushing premium sandwiches
and beverages and rewording its Dollar Menu last year so it can
include items that cost more than a buck.
What does it stand to gain? That's not the question to ask.
What does it stand to lose? Let's say that there are McCafe
fanatics that would choose a McDonald's K-Cup for their Keurig
machines over the hundreds of other current choices. If these are
the people who typically hit the drive-thru window on the way to
work in the morning, pairing up a McCafe with a breakfast burrito
or Egg McMuffin, won't they bypass Mickey D's entirely? They've
brewed their coffee. Are they really going to queue up at a
McDonald's for an Egg White Delight?
In another odd twist, McDonald's won't initially be selling
this at its restaurants. It's only aiming to hit supermarkets,
warehouse clubs, drugstores, and mass merchandise retailers
during the launch early next year. Why? Is it because this is
aimed at non-McDonald's customers? Is it because the company is
afraid it will lose repeat business?
It's easy to kick McDonald's when it's down. It's a giant in a
world where everyone roots for the underdog. However, this has
all of the makings of a classic business blunder. McDonald's
isn't a brand that folks associate with quality, so why would it
knowingly enter stores where the playing field is as level as the
poll of tens of thousands of fast-food eaters rated the quality
of a McDonald's burger
among the 21 leading chains. The McCafe brand has more appeal,
but that may not be the case by the time the last beans are
for the next decade
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McDonald's Follows Starbucks Into Grocery
originally appeared on Fool.com.
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