By now I would not be surprised if nearly all of us have seen a new ad, heard a radio blurb, or have driven by a new McCafe, adorned with banners and ads for their new coffee and espresso beverages. Yesterday, McDonalds started the launch of a new $100M ad campaign that is promoting their McCafe rollout and an expanded espresso and coffee menu.

Nearly 11,000 out of their 14,000 locations in the US have a McCafe nestled inside and have undergone renovations. I read on Dow Jones NewsPlus page that most of the $100k McD's spent on the McCafe installs went towards the efficiency of their drive-thru systems and how the service time can be optimized while also offering a diverse new menu in addition to burgers and fries.

So how does this effect the "specialty" coffee retailer and indy coffee shop owner?

In my opinion, McDonalds is very optimistic if it plans on becoming a "specialty" coffee destination, as the quality of the espresso and coffee it serves is on par with the quality of their food. This is a given, and I don't think McD's is trying to market their drinks as being better on a quality level, but more so on a price point that meets the needs of consumers who may be searching out a deal. Also, I don't see the majority of their McCafe business coming from "new" customers, but more so from existing McDonalds patrons who may add a latte now to their usual breakfast combo meal. It seems they have found a profit center with a high margin, to increase sales and are capitalizing on it.

Also, I mentioned earlier that most of the McCafe efforts were put into the drive-thru portion of the store. This seems cohesive with the idea that McDonalds is not trying to become the "third place" coffee house that Starbucks has tried to position itself as for decades. McCafe's have put effort into the interiors of the McCafe to make them more comfortable, rustic bronze wallpaper, wood accents, tile, etc. but they have a dubious task of changing the consumers perception of McD's as an upscale establishment across the board in my opinion.

I can see this roll out effecting some business for drive thru coffee shops (and inline stores in some cases) that are not focused 100% on quality. This is nothing new. In today's specialty coffee industry, as a retailer you must do everything right. Offer a great product, great customer service, great ambiance and branding, and most important of all, know how to operate and run a sustainable and successful business.

Over the past 8 years I have seen an escalation of quality focused coffee bars opening up and immediately doing well. It has become even easier to differentiate yourself as a retail from your competition of other mom and pops, the chains and ... now ... Dunkin Donuts and McDonalds.

Similar to great restaurants, those retailers who focus on great customer service, professional training programs, excellent coffee and quality menu items will be in a category of their own. The silver lining is that with the exposure and customer base McDonalds has, they will for sure be selling mochas and lattes to customers who may have yet to try anything beyond a flavored coffee, and we will see the demographic of espresso beverage drinkers increase. Similar to how we sometimes thank Starbucks for broadening the market and developing new markets, McDonalds has this ability and it will happen quick.

McD's has impeccable timing as well ... with the "economic downturn" and a country obsessed now with cutting back and not spending money, the idea of saving a buck seems appealing to many. However, the consumer who is used to having a great latte each day will learn very quickly that you get what you pay for. A mocha made by an untrained barista on a super automatic machine in 44 seconds will not taste like one made from fresh roasted coffee beans, high end chocolate, fresh velvety milk from local dairy and served by a professional who understands the chain of events that coffee has traveled thru to get to that (biodegradable) to go cup.

My advice is to always serve your coffees with a goal of perfection. CHARGE MORE than Starbucks and McDonalds, as your serving a far superior product and at only $1 or so more a cup, you are still serving an affordable luxury. Let's let the big guys battle it out, but together we need to take this as an opportunity to truly separate the "specialty" coffee retailers from the caffeine slingers looking to capitalize on this high margin industry.

Would love to hear your thoughts and continue this discussion to see how the "specialty" industry, who each of us understand our markets better than a corporate giant, can educate our consumers on why they should buy from us.

- Matt

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I tried it back in December after my wife encouraged me to do it.
McCoffee
Ok so my wonderful wife thought that it would be a great idea to have a latte from the Golden Arches. I was somewhat eager to try it since I had not yet gone down that path, but I was embarrassed to go through the drive through so I encouraged my wife to make the purchase inside. She made it back to the truck about 5 minutes later and handed me my cup. The anticipation was so hard to bear so I quickly took the first sip, and quickly realized that McCoffee tastes like dirt. I know there may be some fans reading this, but it was horrible! Luckily I got the drink with the whole milk. Lora selected the less fat version. She commented on how the employee said that their machines had been messed up, but they had recently been worked on. Lora tasted her coffee and realized that her drink was not too gourmet either. So my wonderful wife said “try mine and see if it tastes worse than yours.” So stupid me, I took a sip of her “latte”. As Charlie Brown would say “AUGH”; it was worse. It tasted like I was sipping aluminum foil, even though I have never eaten the silver stuff. So long story short, we did not take it back and get our reimbursement of $5.58. But hear me now, I will never drink McCoffee again, not even if I was on a stranded island and that was the last thing on earth to drink. Sorry Golden Arches, you are no Barista, and you need to keep your day job of fixing french fries and filled hamburgers.



I agree with most. McCoffee will be a spring board to increase in future specialty coffee drinkers.
Is anyone keeping track of the number of dead horses being beaten in this thread? Are they also keeping track of the frequency of beatings?
Just stumbled upon the McCafe marketing site from a link on Facebook: http://www2.mcdonalds.com/mccafe/

This seems to go against their previous jab on the "artsy hipster coffee house person" as they narrator is wearing a black turtle neck, and the theme is indy theater ...
What kills me is what McDonalds says in advertising for the McCafe drinks like they use fresh ground espresso and fresh milk for evry drink. There are so many people out there who know nothing about specialty coffee who will believe the crap they see and hear in a commercial. McDonalds is just making it harder for us who really care about what we do and in turn we will have to work harder and spend more time to re-educate the customer about quality and speciality coffee.
In addition I hear that Starbucks plans to roll out a huge ad campaign that focuses on quality.

that rules. best emoticon evar.

miKe mcKoffee aka Mike McGinness said:

Not sure how many saw this yet, but I was on Fox again yesterday talking about McDonalds ... had much more to say but such limited time. Here's the link.
Nicely done. I would imagine it to be a bit stressful to prep for something like that. Ice cold

Matt Milletto said:
Not sure how many saw this yet, but I was on Fox again yesterday talking about McDonalds ... had much more to say but such limited time. Here's the link.
Thanks for posting this link. You did a good job in such limited time. So sad that the guy kept implying that weakness on the part of Starbucks meant weakness in the entire specialty coffee segment... and that McD's inroads against them meant inroads against indies too. I wanted to strangle the guy when he kept saying "its about price" (reminding me again why I avoid Fox news). Glad you were able to get the line in about this making it easier for quality-focused shops to differentiate ourselves. Good job staying focused, cool, and on message.
We must take advantage of this. This is creating an opportunity for people to access coffee who normaly wouldn't step foot into a specialty coffee house. Somehow we need to get their curiosity and for them to step foot in our doors to try our quality drinks. If they like the clown, donut, mermaid products, they should definetly like ours (that's the logic right). What if we (ALL INDIE SHOPS) pool some money together and create our own national ad campaign about how our quality and passion for the industry could never be replaced by someone being paid minimum wage with a automatic machine. While we're at it, why not add to the campaign that if anyone walks into our store and asks for an ice coffee like McCafe or a Caramel Macciato, we get to kick em in the butt.
I tried a McD's "cappuccino" the other day (educational purposes, of course!) I'm absolutely convinced they add sugar. It was EXTREMELY sweet. I noticed that their coffee menu states something to the effect that sugar may be included in other ingredients.
You're freaking ridiculous. That's brilliant.

Dean Vastardis said:
MC D’s is using Bunn for their brewing equipment and Franke super autos for the espresso. Mc D’s is smart to take advantage of the faltering king SBX (soon to be king of instant coffee). We can all thank SBX for introducing the super automatic machine to the North American Market. SBX felt that by having an exclusive contract with a Swiss company called Thermoplan, for their super autos, that they would not allow the competition to replicate their SOP. The approach was tremendously naive and foolish. You can see that they have not learned from their mistakes through the purchase of the Coffee Equipment Company (The Clover) coffee brewing machine. They obviously feel that they harness the ultimate brewing technology available. This is simply not the case. I am aware of many aspects of the industry and one thing I am certain of is that there are new brewing and beverage preparation technologies on their way to market in the next 12 months that will help the independents truly separate themselves from the chains. I know for a fact that these technologies will only be available for independent shop owners. No selling out to SBX. This is what the industry needs, true innovation with the independent in mind.

Innovation in needed in the industry now more than ever. In reality the industry has gotten stale. Innovation has not been innovation but rather an adaptation of preexisting beverages and technologies with slick marketing campaigns. Look at SBX’s “Tea Latte” which was made by steaming tea with milk. It’s not a tea latte, its steamed milk with powdered tea. Look at the typical chai latte, where the tea flavor and spices come from a carton then are mixed with milk. SBX was not the first to heat milk and tea together and the first combination of Chai tea and Milk was not created in Oregon! Again, not innovation but adaptation.

This is the point in time where we the independent shop owners, baristas, aficionados, and roasters must be actively striving to change the way we operated, create and innovate. Time to cut out short cuts and lazy interpretations of true product.

If you have a super auto, get rid of it and buy a traditional machine.

If you have bag tea, scrap it and find a loose tea supplier.

If you use pods, get a grinder.

If you have premixed blender drinks, go buy some fruit.

If you have a self tamping and dosing grinder, sell it and buy a grinder and learn how to tamp.

If you have chai latte mix (I know most of you do) pour it out and make your own chai base and stick it in the fridge. If you don’t know how I would be happy to tell you.

I know that at this point in time the idea of changing anything you do is scary. However, all of these elements are more important now than ever. The only way to survive is to create a clear separation.

Don’t be generic be original. That is something that cannot be replicated.

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