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Food & Drink

McDonald’s Wants to Be Your Coffee Shop

Some have ruminated about the deeper meaning of McDonald’s (MCD) free coffee promotion, which runs through April 13. Here’s one more thought: It’s another attempt to promote the chain as a so-called third place—that daily destination away from home and away from work, and a concept that Starbucks (SBUX) essentially owns—via its McCafé beverage line.

Among the chain’s goals “is to enhance our coffee culture at McDonald’s,” Kevin Newell, chief brand and strategy officer for McDonald’s USA, said at an investors meeting in November. As the success of the cafe business has shown, people are eager to step away from their homes and desks when coffee is involved.

Of course, McDonald’s coffee giveaway is also part of the company’s ongoing efforts to keep people hooked on its breakfast while fast-food restaurants such as Taco Bell (YUM) launch morning menus, and also to drum up interest in McDonald’s bagged coffee, which is coming to grocers. But there’s a decided push to market McCafé as a social product: The “Make Friends with McCafé” sampling events include live music (Karmin performed in New York) and comedy.

The question is, what’s friendship have to do with McCafé? Consumers already head to McDonald’s for quick, on-the-go breakfasts, lunches, and dinners, so it seems the chain now wants to develop a strong affiliation with other occasions: an afternoon break or a leisurely meet-up with friends—the kinds of moments you probably associate with Starbucks. Following in Starbucks’s footsteps, McDonald’s brought in expensive espresso machines and Wi-Fi and introduced seasonal hot beverages.

A spokeswoman for McDonald’s did not respond to questions about its “third place” plans, but as Bloomberg News’ Leslie Patton points out, one of the chain’s top priorities is boosting “coffee-driven visits.” It appears to want consumers to develop a habit and a fondness for its McCafé offerings, which include not only coffee drinks but also shakes and smoothies.

Newell said sales of McCafé—including drip, iced, espresso, and frappés—increased 70 percent from 2009 to 2012, but McDonald’s still has only 12.8 percent of what it calls the “informal eating-out” coffee market. “Significant potential still exists for us,” he said. And this is not just a whim: McDonald’s is now “treating coffee quite frankly as critically important as we do our iconic fries.”

Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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