McDonald’s Brews Bigger Coffee Push

November 1st, 2010

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(Buy A Franchise, Seattle Franchise, Bellevue Franchise)

McDonald’s Franchises use a broad array of marketing tactics, but historically it has left head-to-head-taste-test comparisons to bloggers. That’s why it’s interesting that the chain this week has launched a taste-test TV commercial for its McCafé coffee in Australia.

 The spot opens with a young woman’s assertion that “Blind taste tests have shown that more people prefer McCafé coffee” compared with another leading chain, which isn’t identified, leaving us all free to think “Starbucks,” though the competitor isn’t named. She scurries around Sydney inviting people (including one very-American woman) to sip McCafé and the competing coffee (washing those cups occasionally, we hope), and sure enough, McCafé is preferred. Classic blind-taste-test marketing.

What’s most important here is the reaffirmation of just how important McCafé and coffee drinks have become to the world’s largest burger chain. During last week’s quarterly analyst call, McDonald’s President-COO Don Thompson said coffee’s share of McDonald’s Franchise U.S. sales has grown from 2% in 2004 to more than 6% now. McDonald’s global sales in 2009 were $72.4 billion, of which Chicago researcher Technomic estimates U.S. sales were $30.9 billion.

That means coffee alone was a $1.85 billion business for McDonald’s Franchises in the U.S. It means its U.S. coffee sales were the equal of total 2009 food-and-beverage sales for the No. 6 burger chain, Hardee’s. In some overseas markets, such as Australia (where McCafé began in 1993), McCafé’s share likely is larger than 6% of the total.

McDonald’s is now the single largest seller of coffee in the UK, Thompson says, and the chain has 600 McCafés in Germany. “We see opportunities in many of our other markets  … We do see coffee as a point of leverage and growth for us as we move forward,” he said.

In North America, “we still have an opportunity relative to the broader McCafé coffee,” Thompson told analysts. “I know the U.S. team is going to be marketing those products as well. There’s quite a few things that will be coming up.”

McDonald’s heavily markets its sub-brand in Australia, using the tagline, “There’s more to McCafé.” The menu there is broader, including pastries, cookies, muffins, savory snacks like Spinach & Feta Strudel, brownies and tarts as well as coffee drinks, frappés and smoothies. It’s a big enough menu to spin off on its own, which is what McDonald’s Franxhises are doing in Paris, where standalone burger-less McCafés are being tried.

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