McDonald's coffee drinks not getting customers buzzed?


iced coffee at mcdonaldsWhen McDonald's (NYSE: MCD) went into coffee, the fast-food giant went whole-hog (or bean?). The chain planned to add separate coffee bars to every one of its about 14,000 U.S. stores, and got to about 3,000 when the credit crunch hit and Bank of America pulled back on the availability of funds for its franchisees. This would be a relatively minor setback if it weren't for a problem:

McDonald's customers don't really like coffee.

In a Wall Street Journal article today, which examines whether the coffee rollout came at a bad time, I was struck by a couple of "tweaks" McDonald's has made to its coffee strategy. One, changing the title of the employee who prepares the coffee drinks to "beverage specialist" from "barista" betrays a generality that would indicate a widening of the strategy (if not baldly changing the strategy away from coffee to other drinks). The other is that McDonald's is testing drinks made without coffee (think blended cream beverages at Starbucks). "The strategy is to appeal to customers who like the idea of coffee drinks but not the actual taste. Chocolate "gives people permission to introduce themselves to these drinks," says Darci Forrest, a McDonald's senior director of marketing."


So, McDonald's is leading its customers by the hand down the path of coffee drinks, introducing them to chocolate and then upselling them? Doesn't this seem like the most boneheaded competitive strategy ever devised? McDonald's will spend a few hundred million dollars to convince its customers that they should really be drinking fancy blended coffee at Starbucks. And here's the thing: its customers don't like coffee. Shouldn't they just be left alone with their chocolate shake and their Big Mac?

For once, it's not about the coffee. McDonald's investors had better thank their lucky stars for the credit crunch and hope management pulls back before it's too late.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA+57.0312,858.26
NASDAQ+21.802,925.68
S&P 500+7.211,349.85

Last updated: February 13, 2012: 12:37 PM

Hot Stocks

General Electric

19.03+0.155(+0.82)

Alcoa

10.35+0.06(+0.58)

Apple Inc

497.79+4.37(+0.89)

Google Inc 'A'

612.52+6.61(+1.09)

Bank of America

8.25+0.18(+2.23)

Wal-Mart Stores

61.88-0.02(-0.03)

Exxon Mobil Corp

84.16+0.36(+0.43)

Ford

12.54+0.10(+0.80)

Citigroup

33.37+0.445(+1.35)

IBM

192.38-0.04(-0.02)

Yahoo

16.13-0.01(-0.06)

Starbucks

49.17+0.35(+0.72)

Microsoft

30.56+0.065(+0.21)

Home Depot

45.77+0.44(+0.97)

DailyFinance Headlines

Benzinga Headlines

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

DailyFinance BlackBerry App

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

BioHealth Investor Headlines

Page Loaded in 1329154664286 ms.