A Coffee War is Brewing Between Dunkin’ Donuts, Starbucks, Wawa, QuikTrip, and McDonald’s

Foodservice Solutions® Grocerant Guru® Steven Johnson outlined in his presentation yesterday that the unintended consequences of McDonald’s all day breakfast offerings will be a Coffee War. The battle lines are set and McDonald’s intends to capitalize on the success it found by offering breakfast all day in 2017 by re-energizing, recapitalizing, and refreshing McCafé.

McDonald’s has set a target to get a larger share of stomach specifically Coffee business and has aimed its sights on Wawa, Starbucks, QuikTrip, and Dunkin' Donuts customers for Coffee and incremental food sales.

Kristy Cunningham, U.S. senior vice president of strategy and insights at McDonald’s explained that McDonald’s is retooling McCafé to drive top line sales and bottom line profits. The efforts stars by upgrading its coffee and get more of its beans from sustainable sources, mimicking a move made by rival Seattle-based Starbucks.

Cunningham continues that "We’re really excited about the McCafé brand and what it can do to complement our food offerings. Beside the ‘upgrades’ there will be new McCafé campaign that will include special deals, more seasonal beverages, and increased marketing of the chain’s coffee rewards program.

Currently McCafé generates $4 billion annually in U.S. sales, but could better cater to customer needs. Starbucks and Dunkin’ Donuts have attracted customers with high-margin espresso, lattes and mochas. Although McDonald’s offers a wide range of coffees, it hasn’t become an upscale-drink destination according to Cunningham.

In retooling the McCafé brand, McDonald’s will emphasize its price advantage over Starbucks. For the first quarter of 2017, the company will offer $1 drip coffee and $2 small specialty beverage deals, Cunningham said. Other moves to compete with Starbucks will include:

·         Buying all of its coffee from sustainable sources by 2020;

·         Selling pumpkin spice lattes nationwide this fall for the first time in three years; and

·         Upgrading its espresso machines with equipment that has better milk-steaming technology and can make a wider variety of drinks.

Success does leave clues and while McDonald’s sells Americanos and shots of espresso, and bakes McCafé pastries in-house.  Foodservice Solutions® team considers this retooling, repositioning, and refreshing a shot of espresso across the threshold of the competition.

Foodservice Solutions® team is here to help you drive top line sales and bottom line profits.  Are you Looking A Customer Ahead?  Visit www.FoodserviceSolutions.us   or Contact Steve@FoodserviceSolutions.us for more information.  Remember Success does leave clue and we just may have the right clue for you.