McDonald’s Makes Moves in Coffee Segment

In December, McDonald’s Canada launched its first standalone McCafé at Union Station in Toronto and announced plans to open a second in the city in 2016. Although the concept saw little success during testing in the U.S., the McCafé brand has been an effective operation in Canada. Since launching its McCafé coffee lineup at restaurants in 2011, McDonald’s Canada has seen coffee sales nearly triple. As a result, the chain saw an opportunity to try its hand at the coffee café segment. This is a move that places McDonald’s in the midst of Canada’s tough coffee market, taking on major players like Tim Hortons. It will be key for McDonald’s to build a strong, customer-oriented brand to stay competitive. Here are a few of the ways it is doing just that:

All-Day Breakfast: The major announcement to come from McDonald’s in the past year was the introduction of all-day breakfast at its U.S. restaurants, a change that did not extend to Canadian units. However, in a move to help the chain grow beyond its signature burgers and fries, these new McCafé-branded operations will serve the chain’s signature Egg McMuffins throughout the day. As the U.S. increasingly observes all-day breakfast as a growing interest among consumers, it is only a matter of time before this same dining flexibility travels to the forefront of Canadian consumers’ interests.

Come and Stay Awhile: In a strategy not used at traditional McDonald’s units, these new café-style locations are encouraging guests to stick around by tapping into guests’ tech expectations. With amenities like mobile device-charging stations and free Wi-Fi, the company is creating a more comfortable coffeehouse-inspired atmosphere for guests to visit with friends, work or study. This tactic also increases the likelihood of multiple purchases per visit, which positively impacts the chain’s overall sales.

Speed/Price: By serving up specialty coffee faster than competitors such as Tim Hortons and at a lower price point than alternatives like Starbucks, McCafé units may appeal to an underserved consumer base. By maintaining these two characteristics, the concept will fit into a more specific market.

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Patrick Noone

With more than 15 years of experience in the research/consulting industry, Patrick Noone, Executive Vice President, Business Development, is integrally involved in the sales, development and marketing of Technomic's online resources, reports and custom studies—tools that provide clients with actionable industry data that supports their strategic and tactical business planning processes. He also manages Technomic's Business Development and Client Service teams.

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  1. avatar Richard Adams says:

    McDonald’s has wasted billions trying to play in the same arena as Starbucks. The espresso portion of McCafe has been a complete bust. Sure McDonald’s sells a lot of drip coffee because of their great drive-thru breakfast business. But yuppies and millennials sipping on a fancy espresso drink and blogging on their laptop while seated next to a family wolfing down a tray of $1.00 hamburgers? Doesn’t happen, not going to happen. At least not in the lower 48.

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