Although McDonald's has been testing a handful of the gourmet coffee and snack bars in the U.S. since 2001, the real market is overseas, in 33 countries so far. McCafés are all over Australia, ramping up fast in Germany and just starting in Japan, where McDonald's has 3,300 restaurants. McDonald's opened the first 15 McCafés around Tokyo in late August, with menu items including green tea and red-bean shaved ice.
"They're going to struggle in the U.S., but they have a great opportunity abroad," said Darren Tristano, exec VP at Technomic, a food-industry research and consulting firm. "Americans are used to spending small amounts at McDonalds, and getting a 99¢ double cheeseburger and kids' meals. McCafé raises the bar. That's a sticking point. It's difficult to get Americans to spend more money because that's not part of their mind-set at McDonald's."
Right at home
In Europe, McCafés can tap into the tradition of stopping for a leisurely, high-quality coffee and snacks.
McCafé started more than 20 years ago, the brainchild of Charlie Bell, the late McDonald's president-CEO who opened the first McCafés in his native Australia and took them international when he moved to the U.S. Now Australia has more McCafés (406) than any other country, but Germany, with 306, is catching up fast.
|* As of June 30, 2007|
Source: McDonald's Corp.
"Five hundred McCafés are planned in Germany by 2008, and between 600 and 700 by 2011," said Gerhard Schoeps, chief marketing officer of McDonald's in Germany.
The company plans to invest, jointly with its franchise partners, $325 million in McCafés this year.
"We target younger clients and the 39-years-plus generation," Mr. Schoeps said. "We see that clients stay longer in our McCafés. Business is strong mornings and afternoons, times when McDonald's sales are slow."
About one in every four McDonalds in Germany includes a McCafé area. Visitors find 11 kinds of coffee and tea, hot chocolate and mineral water, all served in china cups or glasses, and a range of magazines and daily newspaper Bild to read. Cakes, muffins and other snacks are available, and new menu items are introduced all the time. This summer's trendiest beverage in Germany, an organic soft drink called Bionade that comes in flavors such as elderberry and lychee, is sold at McCafé.
In Germany, McCafé is the market leader in coffee shops. The biggest competitor is Starbucks, which opened in Berlin in 2002 and now has 98 outlets, mostly in big cities. German coffee giant Tchibo has about 500 shops, but customers have to drink their coffee standing up.
McDonald's started advertising McCafés for the first time in Germany this summer. A print campaign was done by Castenow Communications, Duesseldorf. Another agency, Stroer Home Media, Cologne, created outdoor pillars in the form of a giant latte macchiato topped with frothy foam made of plastic to promote the opening of Germany's 300th McCafé.
In the U.S., the company's long-term growth strategy is focusing on the McDonald's brand and introducing premium-roast blend coffee and iced coffee, a company spokesman said. "That may include branding under McCafé, but that's yet to come."