Does McCafe = Double Double Profits?

In response to Heena’s blog post about McDonald’s expansion into a more cafe-style line of coffee drinks (latte’s, cappuccino’s, iced-coffees, and fruit smoothies) as well as ambiance, I would like to comment on what was said about the new image “creating value for its customers by continuously adapting to its customers changing needs”

Previously, McDonald’s has catered to those who value convenience, quick service, and mediocre quality. The people in line want their coffee cheap and fast, and they realize that they get what they pay for. I wonder then, by introducing a new atmosphere and cafe-style options, if McDonald’s will be straying too far away from its original “family on a budget” image?

By offering options such as “with whipped cream or with caramel drizzle,” McDonald’s not only caters to slightly different clientele, but will also have to use extra labour time to complete the specialized coffee order. This obviously creates more costs and leads to a trade-off between quality and efficiency. Will McDonalds successfully supply higher quality coffees to compete with Starbucks and Tim Hortons, or will their traditionally low price-point and quick service be compromised by their extra add-on efforts?

To be honest, considering the mark-up price on coffee products for retailers, I doubt that McCafe would fail. Even offering specialty coffees at a few cents lower than their main competitors would provide them with a great competitive advantage. Complementary products, such as breakfast sandwiches, are still available at an unbeatable price point. This would make McDonald’s more of a one stop location for quick breakfast and/or coffee break needs.

McDonald’s, however, being known for its quick convenience, may not want to dish out the dough for fancy furniture and flat-screen TV’s just yet. It just seems to go against the grain of its strongly branded image too quickly. By encouraging consumers to think of McDonald’s as a place to catch up and relax rather than a place to quickly grab your favourite drink on the go, it might create an atmosphere that just can’t cohabit with their cheap price-point.