When my wife and I traveled throughout central Europe last November, the McDonald's in Munich, Bern and at the airport in Frankfurt really surprised us with the availability of a separate counter with high quality coffee and classic espresso and laté-type beverages with cakes/pastries normally available in a Starbucks. This is a product extension that pleases.
Now, as I scan the Wall Street Journal today, McDonald's plans to bring the McCafe to the USA's 14,000 McDonald's outlets. Nice.
Too bad for Starbuck's shareholders. Often the entry of a major brand (Cisco with Telepresence for example) accelerates the customer decision processes and accelerates opportunities for all the participants and thereby expands the market. This is not one of those.
McDonald's entry is designed as a market-share stealing move.
How is it different?
Cisco already had a standard definition IP video conferencing solution in its portfolio, but introduced a super-premium, high quality experiential product that by price and manufacturing capacity was limited to only the largest organizations and most trusted customers of Cisco. The excitement of the offer's promise and the marketing muscle of John Chambers really capture the attention of so many other participants and interested parties. This was a market changing entry.
McDonald's in Europe, mashes the Starbucks experience style with classic McFare. Upscale tables, big booth couches, separate lounging chairs, WiFi-on-tap and sophisticated curvy room and wall arrangements (I'd have taken photos if it had occurred to me that McDonald's would be launching in America and that I'd be writing about it 2 months later)…
The goal is to usurp Starbuck's 'hip' image and move the whole chain branding upscale and upstyle and that way make McDonald's a young person's cool place to hang, have a meal, enjoy a laté and do some blogging… more snacks, more blogging…. more coffee…. more…
So, for McDonald's this is not about just selling coffee, this is about selling style, something that Starbuck's have been very, very good at marketing and delivering on.
Can McDonald's do it?
You bet. They have the big budgets. They have the operational discipline to introduce something new in a big way. Starbuck's has some choices.
