The New McCafé

McDonald's, one of the biggest restaurant chains in the world, has been controlling the restaurant scene since the 1940’s. Everyday, they serve millions of burgers, drinks and fries. How do they do it? What brings in millions of customers to their front doors everyday? Its by their innovative ideas and new products, which has made them where they are today. Ever since Ray Kroc established the first McDonald's, the chain has had the fast-food mentality ever since. Recently, according to the following article made by Business Insider, http://www.businessinsider.com/mccafe-new-gourmet-coffee-mcdonalds-2017-9, McDonald's has released new coffee beverages along with a revamped McCafé design. The new sleek design was implemented as a strategy to boost sales over its competitors and improve the overall image of the product.

The old vs new McCafé design (source: Business Insider)
As it is a restaurant chain, McDonald's is in the private sector. The company is owned by
individuals and shareholders, as well as runs on profits. Being in the tertiary sector, as a restaurant that provides services to its customers, competition plays a part in McDonald's standing’s in the financial market. Along with the new design, McDonald's has released new espresso-based drinks to the menu: the caramel macchiato, vanilla cappuccino, and americano (each sold for $2 for a limited time). The article states that McDonald’s’ competitor in the coffee sector is Starbucks. Currently, Starbucks' tall caramel macchiato cost $3.95, which is almost doubles the cost of the new drinks. Another article by Nasdaq, states that the average McDonald’s customer spends $3.60 (now $4.00 due to the new McCafé launch) while the average Starbucks customer spends $6.00. This creates a big advantage for the giant corporation as it can gain customers who are looking for high quality coffee, at a cheap price.  

The new line of McCafé drinks (source: Dayton.com)
In addition to the new logo, design and drinks, McDonald’s has also released a new line of McCafé Frappe in grocery stores. In 2016, the company launched a marketing campaign that highlighted the McCafé’s new price (to $1.00). This increased sales by 4% in the second quarter. The new drinks and strategic move that McDonald’s is set to increase sales, as well as the market itself. According to Grand View Research, the “ready to drink” coffee and tea market is set to be around $116 billion by 2024. It is seen why McDonald’s is such a big company. They change, and become innovative in their ideas in order to fulfill their mission statement which states: “Our mission is to be our customer's’ favorite place and way to eat & drink. [...]”

Despite these new changes, many people do not know if it is enough to become the new “coffee” titan. Currently there are at least 80,000 different drinking options to choose from at Starbucks. As you cannot get as many customisations from McDonald’s, it is harder to attract as many customers. This forces the company to rely on it’s cheap prices to get customers.  It is an issue that is connected to change, culture, ethics, globalization, innovation and strategy. McDonald’s has been constantly changing their products and getting new ideas, but the one segment of their menu that never changed was for coffee. That is why the chain has brought the new design and ideas into life as it will provide a fresh start. The implementation of the new products affects the globalisation of the brand because as this integration is only in North America. Soon, it will be across the world, which will encourage a more coffee-based culture (instead of other hot beverages). The new McCafé is obviously a long term plan that will change McDonald’s image along with its menu. Although Starbucks is leading the coffee sector on a global level, McDonald’s is moving up in the ranks, and destined to be a clear competitor.

Image result for starbucks vs mcdonalds
Starbucks' 10 year financial report (source: Guru Focus)

The new McCafé is one of the biggest improvements that McDonald’s has made. The fresh start that has been given allows them to expand their product line and create items that will surprise the market. Being a corporation has its pros and cons. Every restaurant in the chain is part of it’s own limited liability corporation. McDonald’s have to worry about renewal fees, taxes yet are protected in any liabilities. These new McCafé products are going to strengthen the corporation to reach new heights, and ultimately, fulfill their vision which is to “[...] become a modern, progressive burger company delivering a contemporary customer experience.”

Image result for mccafe mcdonalds


Sources:
  • Here’s Why McDonald’s Is Relaunching McCafe. (2017, September 13). Retrieved September 25, 2017, from http://www.nasdaq.com/article/heres-why-mcdonalds-is-relaunching-mccafe-cm845244
  • Meyer, P. (2017, February 05). McDonald's Vision Statement & Mission Statement Analysis. Retrieved September 25, 2017, from http://panmore.com/mcdonalds-vision-statement-mission-statement-analysis
  • Pros and Cons of Sole Proprietorship, LLC and More. (n.d.). Retrieved September 25, 2017, from http://grasshopper.com/resources/jump-starting-and-growing-your-business/nuts-and-bolts/
  • Spiegel, A. (2014, March 04). FACT: There Are 80,000 Ways To Drink A Starbucks Beverage. Retrieved September 25, 2017, from http://www.huffingtonpost.com/2014/03/04/starbucks_n_4890735.html
  • Taylor, K. (2017, September 06). McDonald's newest menu items should terrify Starbucks. Retrieved September 25, 2017, from http://www.businessinsider.com/mccafe-new-gourmet-coffee-mcdonalds-2017-9







Images :
  • http://www.dayton.com/news/mcdonald-unveils-new-espresso-drinks-more-coffee-beverages-coming/tJxPW7nWn1lKn3DP4CyT8M/
  • https://www.gurufocus.com/news/21677/starbucks-vs-mcdonalds-the-coffee-war-begins-to-percolate
  • http://www.mcdonalds.ca/ca/en/help/mccafe_loyalty_program.html

Comments

  1. Unknown3 October 2017 at 12:16

    Aly,

    Great job going above and beyond to create your own blog.

    Keep up the good work!

    Mr Dorey

    ReplyDelete

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