The Next Restaurant Battle Is Bigger Than Food: McDonald’s, Red Bull and the Fight for Consumer Occasions

 

McDonald’s is getting into the energy-drink business with Red Bull, but from my perspective as the Grocerant Guru®, the bigger story is not caffeine.

The bigger story is consumer evolution.

Consumers are no longer willing to define a restaurant visit by the traditional three meals a day, a limited beverage menu and a single transaction. They want more choices, more convenience, more portability and more reasons to visit—or order—from the brands they already know.

Restaurants that evolve with those expectations can create new revenue streams.

Those that don't risk losing customers to competitors, convenience stores, coffee chains, grocery stores and increasingly sophisticated foodservice retailers that are willing to give consumers exactly what they want.

McDonald's is betting that Red Bull can help open another door.

Beginning August 17, participating McDonald's restaurants will offer the Red Bull Dragonberry Energizer, combining Red Bull with raspberry syrup and freeze-dried dragonfruit. Customers looking to reduce calories can substitute Red Bull Zero, and participating restaurants will also sell an 8.4-ounce can of Red Bull.

McDonald's is simultaneously expanding its "dirty soda" strategy with the Vanilla Swirl, which combines Coke, Diet Coke or Coke Zero with vanilla and cold foam.

That may sound like two beverage launches.

I see something much bigger.

McDonald's Is Expanding the Day, Not Just the Menu

The restaurant industry has historically thought about dayparts in fairly rigid terms:

Breakfast. Lunch. Snack. Dinner. Late night.

Today's consumer does not.

An afternoon customer may want an energy drink rather than coffee. A teenager may want a customized dirty soda. A parent may want a meal and an energy drink for the road. A worker may want something cold and caffeinated at 3 p.m. without sitting down for another traditional meal.

That creates an enormous opportunity for restaurant chains.

Energy drinks are particularly interesting because the category has experienced significant growth at retail since 2020, with sugar-free products helping drive the expansion. Consumers increasingly view energy drinks as an alternative to coffee, and afternoon consumption gives restaurants an opportunity to create a new occasion between lunch and dinner.

That is precisely where daypart expansion becomes strategically important.

McDonald's isn't simply selling another beverage.

It is attempting to create another reason to visit McDonald's.

CPG Is Becoming Restaurant Foodservice's New Frontier

The other important piece of this strategy is the blending of CPG and restaurant foodservice.

For years, the restaurant industry largely separated itself from packaged consumer products.

Restaurants sold prepared food.

Grocery stores and convenience stores sold packaged food and beverages.

That distinction is rapidly disappearing.

Today, restaurant consumers increasingly expect recognizable CPG brands inside restaurants—and restaurants are increasingly recognizing that CPG partnerships can provide credibility, variety and incremental occasions.

Red Bull is an especially powerful example because McDonald's doesn't have to convince consumers what Red Bull is.

The consumer already knows.

That dramatically lowers the educational burden.

The restaurant gets the traffic opportunity while the CPG brand gets another distribution channel.

That is a powerful symbiotic relationship.

McDonald's Needs More Than Traffic—It Needs More Transactions and Bigger Baskets

The timing is also important.

McDonald's reported only 0.8% same-store sales growth in the second quarter, despite beverage initiatives and marketing promotions, while restaurant traffic remained weak.

That makes this beverage expansion more than a menu experiment.

It is an attempt to create incremental demand.

And that is exactly how restaurant executives should be thinking.

The question shouldn't simply be:

"What new food should we add?"

The better questions are:

What new occasion can we own?

What existing customer need can we satisfy?

What product can bring a customer into the restaurant who might not otherwise come?

What product can increase the average check without substantially increasing labor or complexity?

Those are very different questions.

The Drive-Thru May Be the Most Important Asset in This Strategy

There is another opportunity hiding in plain sight.

The drive-thru isn't simply a faster restaurant entrance.

It is a high-speed distribution platform.

Most chains continue to think about the drive-thru as a way to fulfill one order at a time.

The Grocerant Guru® sees an opportunity to think much bigger:

How many meals can one vehicle deliver?

A consumer picking up dinner for a family could potentially leave with meals for four people, an afternoon snack for tomorrow, beverages for the car and packaged products for later.

That turns the drive-thru from a transaction point into a mini foodservice distribution center.

And CPG partnerships can help make that possible.

Imagine ordering a family meal and adding an energy drink, packaged dessert, snack, bottled beverage or another ready-to-eat item for later.

The restaurant has just expanded the transaction beyond the immediate meal.

That is daypart expansion, basket expansion and channel expansion happening simultaneously.

Three Drive-Thru Ideations From the Grocerant Guru®

1. The "Add One More" Drive-Thru

Build the ordering experience around one simple question:

"What else do you need for later?"

At the speaker, app or kiosk, customers could receive highly targeted add-ons based on the order and time of day.

Breakfast could trigger an afternoon beverage.

Lunch could trigger a snack.

Dinner could trigger tomorrow's breakfast.

A family meal could trigger additional beverages or desserts.

The goal isn't to push more food.

The goal is to anticipate the next consumption occasion.

2. Multi-Meal Drive-Thru Bundles

Restaurants should create bundles specifically designed for customers picking up food for multiple people or multiple occasions.

For example:

Tonight's Dinner + Tomorrow's Breakfast + Road Beverages

The customer orders once and receives multiple consumption occasions in one drive-thru transaction.

That could increase average check while requiring relatively little incremental selling effort.

It also gives restaurants an opportunity to compete more directly with grocery stores and convenience stores for the consumer's next meal.

3. The Drive-Thru "Grab-and-Go Market"

The final opportunity is to turn part of the drive-thru experience into a miniature CPG marketplace.

Imagine a designated pickup area containing high-margin, highly portable products that customers can add to their order:

·       Energy drinks

·       Bottled beverages

·       Packaged snacks

·       Desserts

·       Breakfast items

·       Family-size add-ons

·       Ready-to-eat products

·       Limited-time CPG collaborations

The restaurant doesn't have to become a grocery store.

It simply needs to recognize that the consumer's need doesn't end when today's meal is consumed.

The Grocerant Guru® Bottom Line

McDonald's move with Red Bull is about much more than energy drinks.

It is another signal that the restaurant industry is becoming increasingly channel-blurred, daypart-blurred and occasion-blurred.

Consumers don't think in restaurant categories.

They think in needs, occasions, convenience, value and experiences.

The winning restaurant chains will increasingly look outside their traditional menus for ways to satisfy those needs.

CPG partnerships can provide restaurants with recognizable brands, incremental occasions and potentially attractive margins without requiring the restaurant to invent every product itself.

And the drive-thru may ultimately become one of the industry's most underutilized assets.

The restaurant industry spent decades teaching consumers that the drive-thru was the fastest way to get one meal.

The next generation of restaurant operators should be asking how to make it the fastest way to get several meals, beverages and consumption occasions at once.

That is where the real growth opportunity may be.

The consumer is evolving.

Restaurant chains must evolve with them—or risk watching those customers evolve right out of their brand.

Three Grocerant Guru® Takeaways

1. Own more occasions.
Don't just compete for breakfast, lunch and dinner. Build products and partnerships that create afternoon, snack, beverage and "for later" occasions.

2. Use CPG to expand the menu without reinventing the kitchen.
Strategic CPG partnerships can add recognizable products, new consumption occasions and incremental revenue while potentially limiting operational complexity.

3. Turn the drive-thru into a multi-meal distribution channel.
The next evolution of the drive-thru isn't necessarily serving more cars faster. It is serving more consumption occasions per car. The brands that learn how to put multiple meals and occasions into a single transaction could discover a powerful new source of top-line sales and bottom-line profit.

Are you ready for some fresh ideations? Do your food marketing ideas look more like yesterday than tomorrow? Interested in learning how our Grocerant Guru® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit: us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

McDonald's Positivity Wins the Day

 

Once again, success does leave clues.  Industry leading companies understand that there is an increased unmet need that consumers are expressing when it comes to their everyday life and food, meals, and beverages.  That unmet need is being express in the form of more ‘sustainable’ food and beverage products that according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® “includes living, being happy, healthy, and hopefully vaccinated.

Sometimes companies are asked to step up and lead. McDonald's leadership is showing as it is partnering with the federal government to provide COVID-19 vaccine information on billboards, coffee cups and package seals.  That branded messaging is better for you, better for me, and better for everyone around the world. 

McDonald’s said that its role in the U.S. Health and Human Services Department’s “We Can Do This” campaign would begin later in May with third-party COVID-19 vaccine information posted on the McDonald's billboard in New York City’s Times Square.

It takes time to produce the millions of cups and seal stickers, then get the items through the supply chain and into the stores. Then, starting in July, McDonald's hot McCafé cups and McDelivery seal stickers will promote vaccines.gov information and its locator for finding vaccine appointments. The website is sponsored by HHS, Boston Children’s Hospital and the Centers for Disease Control and Prevention.

So, the McDonald’s new packaging and ads will feature art from the national “We Can Do This” campaign, setting the campaign's slogan against a map of the United States.

The press release from McDonald’s, stated, “McDonald's is committed to making helpful information accessible to our customers, who are encouraged to share the campaign using #WeCanDoThis to inspire others to learn more about what they can do to help end the pandemic,”.

Then Genna Gent, McDonald's USA vice president for global public policy and government relations, stated, “We all want to protect ourselves and our loved ones and be together with our communities again. McDonald's is excited to be doing our part for the people we serve, providing them with simple information that can help keep them safe.”

Gent continued saying the program would reach customers in the 14,000 U.S. communities it serves. Xavier Becerra, secretary of Health and Human Services, stated, "Thanks to McDonalds, people will now be able to get trusted information about vaccines when they grab a cup of coffee or order a meal.”…“Ending this pandemic requires all of us working together to do our part, including encouraging our friends and family to get vaccinated. This effort will help more people make informed decisions about their health and learn about steps they can take to protect themselves and their communities."

The team at Foodservice Solutions® simply wants to say, THANK YOU, McDonalds.

Are you looking for a new partnership to drive sales? Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday that tomorrow?  Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success.

At McDonald's Packaging Matters But is that Enough

Regular readers of this blog ask have asked What is McCafé?  When Steven Johnson, our Tacoma, WA based Grocerant Guru® probes those asking the questions, there is one underling question that all that asked have in common that is: Why do they limit what  McCafé an idea, a tagline, or a move to grocerant positioning?

So, when we heard McCafé U.S. is refreshing its brand look and feel to celebrate 10 years. The new brand identity includes an updated logo, new golden cups that matches its gold standard for quality coffee and a new brand tagline: “Good is Brewing.” I guess the answer is COFFEE. In 2019 Johnson ask is that enough to drive incremental sales, reduce labor cost, and extend the McDonald’s brand reach?

Yes, Packaging helps but will the new look on McCafé cups, pastry bags and additional packaging at McDonald’s restaurants around the country drive sales?  While the ‘halo’ of better-for-you drives millennials to buy more will chain’s newly designed McCafé hot beverage cups will continue to be Forest Stewardship Council-Certified make a difference?  Did you know that the cups were ‘Forest Stewardship Council-Certified’?

If reducing labor cost is at all top of mind at McDonald’s, then Vice President of Menu Innovation, Linda VanGosen might want to consider how to leverage McCafe’ to garner new incremental customers with new grocerant niche meal, menu, and magic according to Johnson.

VanGosen sated “Over the years, we’ve been focused on elevating the McCafé experience—from adding more choices, evolving the in-restaurant experience and broadening accessibility to this important brand,” .. “This latest update is a natural evolution of the steps we’ve taken to modernize the brand experience and deliver growth. We remain excited about coffee, and will continue to prioritize making McCafé a go-to coffee destination for customers.”  Seems to the staff at Foodservice Solutions® once again that the status quo is a step back.  Consumers are dynamic not static and McDonald’s should not rest on the past but move forward with consumers.

McDonald’s, McCafé is a platform that could be used to drive top line sales, bottom-line profits all while reducing unit labor cost.  If success leaves clues and it does McDonald’s will evolve this platform.

Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday that tomorrow?  Visit www.FoodserviceSolutions.us for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success.

McDonald's bold embrace of the Grocerant Niche

Why is it successful companies seem to pick up all of the right success clues?  Could it be that they listen to customer better than other companies?  That is exactly what Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® believes.

McDonald’s McCafé has introduced its latest beverage innovation targeting a new avenue of distribution that will drive incremental sales and profits for the global fast food retailer according to Johnson. The new product is a line of bottled McCafe Frappés, (grocerant niche Ready-2-Drink), coffee drinks that will be the foundation creating new electricity the McDonald’s brand.  

So, just what is your brands new electricity? According to Johnson, “Brand relevance is in part driven with innovation in new food products in combination with new avenues of distribution all of which are the platform for the new electricity.”

Johnson stated “that in my minds-eye the new electricity must be very efficient for the supply and includes such things as fresh foods, developing brands, unique urban clothing, grocerant positioning, Fresh food messaging, autonomous delivery, cashier-less retail, plates, glasses, cash-less payments, digital hand held marketing.

Foodservice retailers to survive the next generation of retail must embrace the artificial intelligence revolution while simultaneously embracing fresh food that is portable, fresh, with differentiation that is familiar not different.  That will require brands to embrace new fresh food partnerships more now than ever before according to Johnson.

Every generation McDonalds customers will embrace the new avenue of distribution.  For McCafé lovers nationwide they will have another easy way to grab their favorite pick-me-up. McDonald’s launched the line of bottled McCafé Frappé coffee drinks in grocery and convenience stores, as well as mass merchandisers across the U.S.

The drinks are available in three flavors – Caramel, Mocha and Vanilla – bottled McCafé Frappés deliver craveable and delicious café-quality coffee on-the-go. The Coca-Cola Co. manufactures, distributes and sells bottled McCafé Frappé coffee drinks, and combines brand-building and distribution expertise together with McDonald’s to offer a new way for people to enjoy the taste of McCafé. They are made with 100% Arabica coffee beans and blended with real milk, sugar, natural flavors and other ingredients for a smooth, perfectly balanced taste.

Interested in learning how Foodservice Solutions 5P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization? Email us at: Steve@FoodserviceSolutions.us or visit:  www.FoodserviceSolutions.us for more information.

It’s still Cold Outside and McDonald’s Beverages Sales are Hot, Hot, Hot

Foodservice Solutions® FIVE P’s of foodservice marketing has set a new standard driving top line sales and bottom line profits for food retailers that integrated the FIVE P’s into branded messaging.  According to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® no one does it better than McDonald’s. For those of you not regular readers of this Blog the Five P’s are:

Integrating innovation with both Price & Portability are two key drives of McDonald’s incremental beverage sales success.  The new innovative flavors of coffee available at McCafé are called Turtle beverages that expand and extend coffee experiences, flavors and choice for consumers.

The new Turtle coffee beverage line are seasonal limited time offers  (LTO’s), café-quality drinks featuring a delicious blend of chocolaty, caramel and hazelnut flavors. Beginning this April, coffee lovers nationwide can choose from an Iced Turtle Macchiato, Turtle Macchiato or Iced Turtle Coffee at participating U.S. restaurants that include:

Iced Turtle Macchiato: A rich swirl of chocolate is joined by caramel and hazelnut flavors then layered with cold, creamy milk and bold espresso, topped with chocolate drizzle, and served over ice it is available with choice of whole or non-fat milk.

Turtle Macchiato: Starts with a rich blend of chocolate, caramel and hazelnut flavors, which are combined with creamy steamed milk and bold espresso. It is topped with a sweet chocolate drizzle and served hot for a delicious treat one gain it is available with choice of whole or non-fat milk.

Iced Turtle Coffee: Our refreshing iced coffee is swirled with chocolate, caramel and hazelnut flavors and a touch of rich cream.

Elina Veksler, senior director of McCafé Menu Innovation for McDonald’s stated “Over the last year, McCafé has broken new ground with a series of exciting changes and it’s only just begun,” …“Our Turtle coffee beverages are a new take on an indulgent treat. With the first sip, you’ll taste a delicious blend of chocolaty, caramel and hazelnut flavors that work together perfectly for a rich and smooth coffee experience. These beverages are skillfully made by restaurant crew for just the right balance of flavors, ensuring our customers receive a café-quality beverage every time.”

Here is the competitive play PRICE as customers can enjoy any of McDonald’s small McCafé espresso drinks, including the Turtle Macchiato (hot or iced) for $2 thus targeting both Dunkin Donuts and Starbucks. Then McDonald’s doubles down adding PORTABILTY to the mix as customers can get their favorite McCafé drinks delivered to them with McDelivery on Uber Eats.

Integrating innovation with the FIVE P’s of food marketing is a sure way to elevate, educate, and invite customer to sample, enjoy, and migrate to your platform / brand according to Johnson. How are you garnering new customers?

So just what is your New Electricity? Success does leave clues www.FoodserviceSolutions.us  is the global leader in grocerant niche business development.  We can help you identify, quantify and qualify additional food retail segment opportunities.  Has your company had a Grocerant ScoreCard completed a Grocerant Program Assessment, or new Grocerant niche product Ideation?  Want one?  Call 253-759-7869 Email: Steve@FoodserviceSolutions.us