The chain that offered "Free Coffee Mondays" to get consumers to taste its brew will give away more than 2 million McSkillet burritos the morning of Feb. 28 and 29 as part of a national sampling event. On those days, McDonalds's customers will be offered a free burrito with the purchase of a medium or large drink. The McSkillet, composed of scrambled eggs, potatoes, sausage, salsa, onions, peppers and cheese wrapped in a flour tortilla, retails for about $2.49. A large coffee costs about $1.33, depending on the market.
'Sampling is critical'
"Sampling is critical to any marketplace," said McDonald's spokeswoman Shanelle Armstrong, who said the McSkillet burrito, which launched last November, has "performed well" and that the giveaway isn't a reflection on its performance. "Ultimately we want to get our product in our customer's hands, and we're committed to doing that like never before."
So just how much will it cost McDonald's to do so? One industry expert says the cost will be very little -- and the free food may also earn money for the chain. "If you take a look at the fact that you've got a higher-margin product in a beverage, it's probably going to equalize that," said Darren Tristano, exec VP of Technomic. "It's probably not going to cost much at all, if anything."
Mr. Tristano explained that a $2.49 item probably has a 75-cent food cost. He added that some customers will also come in and buy other items, which could even make the giveaway incrementally profitable.
As long as they don't trade down
The biggest danger Mr. Tristano saw with the giveaway was the possibility of persuading an already loyal breakfast customer to trade down from a more expensive item.
"Mornings can be a busy time for many consumers and we're thrilled to be able to provide a great start to their mornings with a free McSkillet Burrito," Neil Golden, chief marketing officer of McDonald's U.S., said in a statement. "We encourage customers everywhere to stop by their local McDonald's restaurant for a delicious way to kick-off the Leap Year."
In a study the chain commissioned from Kelton Research, McDonald's reports that about 48% of Americans grab breakfast on the go at least once a week.
The giveaways are beginning to be something of a habit for the Golden Arches. In addition to "Free Coffee Mondays" to introduce its premium roast coffee, and the chain also has been giving away vanilla lattes on that day in a few markets.