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Wednesday, Jan. 9, 2008 at 7:00 am

Would You Like a McFrappuccino With That?

By Robert Gorell
January 9th, 2008

AFP photoAs you may know, McDonald’s is trying to beat Starbucks at its own game — or at least steal some market share. According to The Wall Street Journal, the fast food giant is now hiring baristas and, starting this year, they’ll begin putting coffee bars in some 14,000 U.S. locations.

This isn’t the dumbest thing they’ve done lately, but it’s weird.

Starbucks, meanwhile, also hopes to emulate Starbucks — as it once was, anyway — now that Howard Shultz has returned as CEO, renewing his vows with customers. Considering that they’ve been the McDonald’s of coffee since at least 2000, when Shultz last held the position, this oddball battle of the brands is already the height of corporate irony.

Sure, this may seem like a good time for McDonald’s to get into the game (their share price went up 31% last year while Starbucks dropped 41%). And yes, there are a lot of great reasons to compete with Starbucks from the two-dimensional comforts of a spreadsheet. But do they really want trained baristas?

Besides, isn’t the current Starbucks mess thanks to the company’s over-caffeinated growth — the very growth that Shultz pioneered — and not because they abandoned their mythical, shade-grown je-ne-sais-quoi?

The bagel shop near my apartment has some of the best bagels in Brooklyn. They also have a cappuccino machine, if not a barista. You can order a “half-caff french vanilla iced latte” if you want, but I don’t recommend it. The guys behind the counter will sneer at you, as will fellow customers as you hold up the line. But there’s something nice about that. It’s honest. Terrace Bagels doesn’t want to be Starbucks, and neither it seems should McDonald’s.

Starbucks, on the other hand — yeah, they might wanna look into that.

Brand Autopsy‘s John Moore, who wrote the book on Starbucks’ marketing, compares Shultz’s return with that of Michael Dell. It’s too early to say what will and won’t work for these two (*gulp*) cafe chains, but Moore has some good advice from the Starbucks playbook in the meantime.

UPDATE: Not sure how I missed this from the WSJ article, but here’s a video of the machine the McDonald’s “baristas” will be operating:

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Comments (18)

  1. We have McCafés in Europe. They’re not as bad as you may think, but they can’t compete with the top coffee shop chains here. I’ve had coffee at a Stockholm McCafé 2-3 times. I do, however, still prefer other chains.

    http://www.mcdonalds.ie/mccafe/

  2. I totally agree with you. I think McDonalds made a nice move with the whole “premium coffee” thing. Especially by promising to stir in the cream and sugar for you. It’s just a decently brewed cup o’ joe. And if I need a drive-through coffee, that’s where I go. But for specialty coffee drinks? Does anyone think a Mochaccino is what a guy wants with his McGriddle? Or that I’d drive past Starbucks to get a mochaccino at McDonalds?

    Anyway, nice post.

  3. McDonald’s seems to try harder in Europe. From what I’ve seen, they have nicer restaurants, and the employees keep the places cleaner (on average) than they do here.

    Anyway, I can see why frozen (Frappuccino™-like) drinks, iced coffee, and regular “premium blend” coffee would do well at McDonald’s in the U.S., but I’m kind of stuck on why they would need to train baristas. In my younger days, I worked in a few high-end cafes, and I know for a fact that it takes skill and attention to make specialty coffee drinks (anything cappuccino, espresso or latte-based).

    Didn’t Starbucks switch to automatic espresso machines? Maybe that’s what McDonald’s plans on doing. If so, that’s cheating, and it tastes worse. Perhaps that’s why I don’t buy specialty drinks at Starbucks anymore. Score one for quality control, I guess, but for me there’s no joy in paying top dollar for a latte that’s consistently mediocre.

  4. Like it or not, McDonalds is where many single parent or working-class families take their children for a quick, inexpensive meal, especially in suburban towns where the drive-thru is an ideal option.

    Many of these blue-collar cities don’t have the luxury of a Starbucks within their borders (such is the case with my hometown). And even if they did, the Starbucks would most likely not have a drive-thru.

    So what’s the busy mom (or dad) with three kids in the backseat of the car supposed to do for a latte? Find a McDonalds for the expensive meal, wait in line, order, then drive twenty minutes to the neighboring city, load them into the Starbucks, load them back into the car, buckle them up, and drive home even more exhausted? I don’t think she would have bothered. She would have gone without.

    This move seems to target an under-served audience, rather than a bourgeoisie Starbucks crowd.

  5. Kim,

    Thank you for that insightful comment!

    You’re absolutely right: There is a (huge) underserved market, thanks in large part to the demand that Starbucks has created. It seems odd to see McDonald’s play the role of fast-follower, but I’m not really questioning the concept so much as I’m questioning the idea of training (or hiring) “baristas.”

    In other words, do they really think it’s smart to have someone stationed by the milkshake dispenser, carefully making made-to-order specialty coffee drinks, or are they going to have some automated espresso machine that makes it LOOK like there’s some sort of work going on? They’ve got a machine (see the video I just added above).

    Calling these people “baristas” is what’s bourgeois and off-brand. (Just make the freakin’ drinks and be done with it.) If I’m the type of person who’s getting a supersized vanilla latte from Micky Dees, I’m sorry, but I don’t want “a little bit of theater” as suggested by their head of beverage services.

    For me, this was the most telling part of the Wall Street Journal piece:

    “…the new coffee program is a risky bet for McDonald’s. It could slow down operations and alienate customers who come to McDonald’s for cheap, simple fare rather than theatrics. Franchisees say that many of their customers don’t know what a latte is.”

    All of the news items I’ve found make this appear like McDonald’s is putting in legit cafe bars, but that’s nonsense. They’re going too far out of their way to play this thing up, and it’s going to slow down their core business unless the cashier or the fry cook is also allowed to play “barista” (which will surely happen, regardless of what they tell the press).

    My guess is that there will be, at most, 5 made-to-order coffee drinks on the menu, which come out of their automatic espresso machine — basically a fancy milkshake vat. Do they really need to go out of their way to hire people who can operate this thing? If so, that says much more about our school system than it does about McDonald’s.

  6. Starbucks uses a Super_Automatic machine in their stores today – basically the same machine used in McD’s. They moved away from “real” La Marzocca machines years ago.

    For real – from a quality standpoint, McD’s should easily be as good as Starbucks… and both worse than a real barista.

  7. I think that undelying casues of this and other ‘brand jumbling’ are the intersting points:

    -Branding is Not What it Used to Be-
    Its dying or morphing or being reborn or something, but its not going to be the same concept as was developed, perfected and profited from in the 20th. I am at a loss to speculate more but it seems pretty obvious that something is going on.

    In Australia (where I am), over the past 6 months: McDonalds started sell generic KFC, KFC started to sell generic subway & Coca Cola started to sell generic Red Bull.
    On top of that the concept of a ‘household brand’ is being advertised on TV, on prime time, by the TV broadcaster. Brand Advertising itself is being advertised.

    Maybe Starbucks was the ‘Last Great Victory of the 20th Century Brand.’

    Tack on the McDonalds’ (successful) strategic desicion to let go of the ‘consistency & simplicity’ dogma. Coca Cola’s disregard for the holy, secret fromula (the recipe for Coke ceremoniously passed down from CEO to successor) & desicion to ‘diversify away from cola drinks’ and we have some sort of revolution on our hands.

    Maybe Starbucks was the ‘Last Great Victory of the 20th Century Brand.’

  8. Robert & Co.,

    There is more to the McDonalds move than meets the eye. McDonalds is in a tough place in the food market. Originally fast food was pretty cheap and filling (granted, still designed to kill you, but…). Well the prices have gone up and they have had to expand their menu.

    While expanding the menu and handling all of the issues of standard business, McDonalds also has a MASSIVE employee problem. They lose a considerable amount of money (realized and unrealized cash) to employee absenteeism and theft. So they need to move up market and to be able hire a higher caliber employee.

    To do this they need to create a market between fast food and casual dining (casual dining is getting hammered now too) – FAST CASUAL.

    In my humble opinion, coffee is a great place to start this transition.

    Thanks,

    Wilson

  9. Wilson,

    Great points. I’m not questioning the strategy behind the move so much as the execution.

    My gripe has more to do with the pretense of calling a push-button + add whipped cream + sprinkle cinnamon powder drink-maker a “barista” and pretending that this is somehow “theater.” The execution seems to be what makes the business strategy risky.

    “Fast Casual,” eh? Still seems like a stretch for McDonald’s. After all, they originally designed their restaurants to be uncomfortable, just to increase customer turnover. Also, I wonder if they can solve a management problem (the employee situation) with a new product. I guess any excuse to hire better employees is a good one. But couldn’t they do that as a matter of hiring policy, or by paying a higher rate instead?

  10. Hmmm…wonder if this will work any better than the “new adult menu” they tried in the 90s? (I still remember the goofball new, mproved Fish sandwich with the gloppy gourmet sauce and “fresh-baked potato bun.” Gimme the little square of mystery fish please.)

    Good idea if – as Kim noted – it’s an add-on for the grown-ups who’d like a latte and have to do the whole kid fast food thing.

    Bad idea if McDonald’s is looking to take share from Starbucks. In fact, Starbucks core customers are going elsewhere (at least from I’ve seen and read.) – and it isn’t to Mickey D’s (I go to a locally-owned chain. Coffee is better, good simple real food menu if I want to grab a light meal, good vibes and they don’t try to sell me a gazillion other things.)

    Wilson – I also appreciate yousr take on the employee problem. It takes more than McDonald’s trying to rid the world of the term “McJob.” However, I’m not sure fry cook to barista is that much more of a compelling career path. Still have to wear the uniform, stand on your feet for hours, and go home smelling like a french fry.

  11. When I was in high school I worked for a large catering company. The waiters(tresses) like me were the ‘scum’. High turnover, no respect, the youngest, etc. You could tell a ‘waiter’ to do anything.

    Bartenders were higher up in the pecking order. You couldn’t tell a bartender to go unpack a truck or take the van to get more forks. They tended to be 21-23 yrs old.

    Hostesses were slightly ahead. They wore dresses, got hired for their ahem’ ‘wits’ and you couldn’t tell them to do anything but ‘host.’ Period.

    I believe the salaries were all very similar.

    Maybe the barrista is not a terrible HR move.

  12. I just could never picture myself ordering a Big Mac combo along with a double tall vanilla latte here in North America! If you ordered the specialty coffee at a place like McD’s, would you actually expect a quality beverage?

    I pay the same amount for a kids meal at McDonald’s as I do for my beverage at Starbucks. I’m coming in with two very different buying behaviors. My kids meal is purchased just to fill a void (hunger) while on the run and my specialty beverage is purchased when I’m feeling a little more high maintenance. I just can’t see how these two worlds can successfully collide in North America.

    I don’t think it’s fair to compare McDonald’s in North America with the McDonald’s in Europe. As Robert mentioned above, McD’s puts on a higher class show in Europe. I had a Cappuccino with a Caprese salad in Italy a few years ago and they were both actually pretty good! If they could transition their branding from how they are perceived in Europe to North America, they might have a better chance.

    One last thing to ponder: if you were looking to become a barista, would you more likely apply at Starbucks or at McDonalds? Maybe McDonalds will fill the barista position as a promotional tool for the existing employees that are being hired for the regular position.

  13. Hmmm. Interesting move for McDonalds.

    I have to agree with Robert, using a steel-encased “barista” doesn’t just seem the same.

    What it does say is that McDonald’s is striving to be the Wal-mart of coffeeing, which means find some type of effective and efficient way to give their customer base a consistent, yummy cup of java.

    And the steel-encased non-human barista just might make the cut. The test of success will come down to whether their drive-thru customer base will buy it as a part of the McDonald’s story.

    If they do, then sounds like McD’s has a real winner on it’s hands.

    If they do not, then at least it was a good try.

    I’ll be honest here. If they can successfully give me a consistent and yummy, heart-warming coffee treat through their drive-thru…then I’m sure I’ll turn into one of their raving fans…telling everybody I know to go and try it for themselves.

    I will have keep my eye on this development. Sounds like it will be a marketing marvel.

  14. You are 100% right, Robert. I take the time to make coffees from scratch at home and it took me 1-2 years to truly perfect my cup of java. Now the chains can’t compete with my cappuccino. ;)

    There was a barista at one location that made a cappuccino that was much better than the average — even from that chain. I later read she had won a competition (or placed second, can’t remember) for professional baristas. So, yeah, you do notice a difference.

    McCafés aren’t as fast as McDonald’s fast food here — and that’s a good thing. Otherwise they could just use a machine.

  15. I think if you look at the two stock prices since you wrote this article you may have a good idea how this all turned out … for now…

  16. McD’s have started to do out the inside of their restruarants and makes it look more welcoming for the older person as well as the young ones. I think it is a good move and will attract different customers.

    Mike in the UK

  17. I think Mc shouldn’t do this.

  18. I don’t think Starbucks has much to worry about with Mcdonalds. Their coffee is way better anyway.

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