Daniel Acker/Bloomberg
A McDonald's Corp. McGriddle breakfast sandwiche is displayed with McCafe coffee.
Hollie Shaw Nov 17, 2011 – 6:46 PM ET | Last Updated: Nov 18, 2011 9:35 AM ET
Most Canadians had not sampled a latte or a cappuccino before Starbucks Coffee Co. opened in Canada in 1987, indoctrinating us with its ersatz terminology for small, medium and large beverages.
Now, nearly 25 years later, the drinks are gaining an even broader mass-market reach with their introduction at McDonald’s Canada and Tim Hortons Inc.
According to McDonald’s, there are many Canadians who still have yet to sample the Italian-style coffees, and the fast-food giant is aiming to change that with a sweeping multimedia campaign for its new McCafé espresso brand.
While the McCafé concept has been on the East coast of Canada for years in a market-test mode, the outlets began to roll out in earnest this year and is already at 900 restaurants. All 1,400 will have McCafés by the end of 2012.
The rollout comes just two weeks after Tim Hortons announced it would follow suit with its own version of machine-brewed lattes, though those drinks are already pre-sweetened.
A series of ads introduces the new tag line, “Bring back the break,” and focuses on the beverages as an opportunity to relax.
In an era in which everyone is checking mobile devices in his and her down time, consumer research showed that a true time-out coffee break “has sort of disappeared from our culture,” said Joel Yashinsky, senior vice-president and chief marketing officer at McDonald’s Canada.
The commercials also take pains to authenticate the coffee as genuine espresso drinks using fresh, real milk products.
While a Starbucks lover might be skeptical about a latte from McDonald’s — $2.29 for a small size— a whole new audience that has only consumed drip coffee might be encouraged to try it if it is offered at McDonald’s, he said.
Another marketing point of difference from Tim Hortons is the strategy to focus on fresh ingredients — freshly ground espresso and real, fresh milk, said Ken Wong, a marketing professor at Queen’s University’s School of Business.
“When McDonald’s first started with McCafé, I think the public belief was that this was not going to be real coffee — that it would be some chemical product and not made from natural ingredients. So [in promoting the real ingredients] it conveys what McDonald’s feels needs to be conveyed. It is the same formula they used with the Egg McMuffin in trying to differentiate themselves from all of those breakfast sandwich competitors, promoting the fact that they were made with real eggs, real bacon and real cheese.”
The McCafé beverage lineup includes cappuccinos, lattes, Americanos, espressos and mochas. Like Starbucks, the beverages can be customized to add extra espresso or flavour shots such as caramel.
When the food war began in earnest with Hortons, McDonald’s reformulated its standard drip coffee to a new Arabica brew that drew positive reviews from customers. The company has held six free coffee events in the past two-and-a-half years, giving away more than 60 million cups in total. Since then, McDonald’s Canada has doubled its brewed coffee sales, Mr. Yashinsky said.
But espresso carries a larger profit margin and consumption is up in Canada, rising 2% in the year ending August 2011, according to market researcher NPD Group Canada’s CREST data. In the same period, consumption of brewed coffee was flat. Specialty drinks take up less of the coffee market at food-service outlets, with sales of about $1-billion, while the market for brewed coffee is $4.5-billion.
In addition, the familiarity of McDonald’s takes away any caution a consumer might have about trying an espresso drink, said David Daga, vice-president creative director at Cossette in Toronto, McDonald’s agency of record. “It allows new espresso drinkers to feel a lot more comfortable ordering that.”
Nevertheless, the look and tone of the creative campaign are a bit more Starbucks than McDonald’s, but that is also part of the point — the company began refurbishing its outlets three years ago with a more upscale look that includes fireplaces, stone accents and dark-wood banquettes.
The ads reflect that shift, Mr. Daga said. “The McCafé brand itself is directed towards where the restaurants are going and the redesign. The commercials are quality commercials, and we want to make them reflective of the brand experience.” That tone is also reflected on the company’s website, McDonalds.ca. “Tribal DDB has helped with the redesign of the website, which has a brand new look and feel and a very McCafé focus for a while,” Mr. Yashinsky said.
The massive media blitz also includes radio, out-of-home and digital elements. McDonald’s will also send out McCafé coupons to an estimated 95% of Canadian households over the next week, including a free small McCafé beverage and a buy one, get one free coupon offer.
But will the efforts propel more snackers to try a McDonald’s espresso drink over one from Hortons or Starbucks? Prof. Wong is skeptical.
“The irony here is even though that McDonald’s may be a more true latte than Tim Hortons, which tastes kind of like the old sweet and creamy General Foods International [instant] coffee line you could buy the grocery stores [now branded as Maxwell House], it may not be as successful because it actually is a true latte.”
“Starbucks is not a coffee place — it is more of a refuge and a haven for customers. McDonald’s can’t match that as a result of its restaurant format, no matter how it looks.” With some outlets having no discrete area or cash register for McCafé, you might be in for a longer than expected wait in line relative to a coffee place.
“If all you want is that latte, what is worse than standing and waiting behind a family ordering six Big Mac meals?”
Marketing is about the experience of the restaurants living up to promise of the TV ads, he said. “You can encourage people to try something, but then you have to provide them with that if that is why they went in there.”
Posted in: Marketing Tags: Coffee, Coffee War, Espresso, McDonald's, Starbucks, Tim Hortons
