McStarbuck's

[Jinmyo]

Walk into the restaurant, turn right and the place looks just like every other McDonald's. Turn left and you're inside a faux-hipster espresso bar, complete with comfy chairs, Frank Sinatra on the sound system and an Italian espresso machine steaming up McLattes.

McClick.

[tryska]

McCafe also helps the company beat what it calls the "veto vote" -- the person in a group of diners who vetoes McDonald's because there is nothing on the regular menu that appeals to him or her. 

there are people who gather with their friends at mcdonalds for dinner?

[Coop]

We have had a McCafe for a couple of years in Maple Ridge (35 miles east of Vancouver). Once I heard the esspresso drinks came from a glorified vending machine I knew my presence was unlikely. Isn't Starbucks bad enough?

[Coop]

Perhaps the French Laundry should start serving Big Macs to avoid that dreaded veto vote.

Edited December 1, 2003 by Coop (log)

[tryska]

*lol* i thought that's what kiddie menus were for!

[herbacidal]

Perhaps the French Laundry should start serving Big Macs to avoid that dreaded veto vote.

[s9498]

LOL. A McCafe is around the corner from where I live. I don't eat there so I don't know how business is. Nothing like chugging down a frothy coffee blend after a greasy Big Mac.

Edited December 1, 2003 by s9498 (log)

[sherribabee]

Ugh.

Out of curiosity, I stopped at a McCafe in Sicily a couple of years ago. Tried a capuccino or something and it was atrocious. I think I managed to choke down 2 sips before dumping it.

What's next, a McD's sushi bar?

[herbacidal]

"We decided if we are going to grow we have to be better, not necessarily bigger. It's all about revitalizing the brand, and McCafe is the manifestation of that intent," he said. "It brings to the consumer the new aspects of modern life ... and appeals to a growing sophistication of the American palate."

If they wanted to revitalize the brand, they'd get back to basics.

Not that messing around with McCafes, Chipotle and etc. isn't worthy, because they are.

They just don't revitalize the brand. The best business tactic for them is to take advantage of those areas is to develop other brands.

They should be trimming a few locations and streamlining their menu, as far as McDonald's goes.

That provides steady cash flow.

Then develop a cafe brand, Chipotle brand, etc.

That provides sales growth.

Combine the 2, with McDonald's distribution, system, etc., and that's a formula for success.

[fresco]

McDonalds lacks the courage to be a market leader, and this will sink them. When every other chain is racing to the bottom (cheaper food, bigger portions) the Golden Arches should decide that their livelihood is making better burgers and fries than anyone else.

[ExtraMSG]

I understand complaining about McDonald's from a culinary standpoint, but from a business standpoint? Compare the likely success of them opening a store anywhere to that of any independent and complaints about their business models should just fade away.

They're not trying to revitalize their brand through these other ventures. They're trying to diversify their business interests, which is almost always an intelligent business decision. It's like Disney teaming with Pixar. They're not trying to revitalize Disney's name, they're hedging their bets on the future of animation (and considering how well Pixar has done and how well Chipotle is doing, both seem to be making smart decisions).

[EdS]

I lived near the McDonald's mentioned in the article. Not far from there are some nice independent cafés that get a good business and there's a Starbucks just across the street. Choosing that location for a trial is asking to get creamed. Why attack strength?

I think McDonald's core competence is (or was) offering a consistently good burger and fries and doing that at a decent price. I recall being a kid in the 70's how I loved those burgers. I swear they were better back then before the beancounters started picking away at quality.

About a half mile away from that McDonald's in the article there's another one. And right across the street there opened an In & Out, the famous Southern CA chain that was beginning to expand to Northern CA. Superior burger and fries at about the same price as McD, no extraneous stuff on the menu to distract so everything's cooked to order and fresh, better service, and certainly cleaner (McDonalds' seem to be filthy these days). That In & Out was a hit from the beginning. Something tells me that McCafe isn't going to be kicking in the teeth of that Starbucks across the street in the same way.

My advice to McDonald's is to relearn the basics. McDonald's University needs to go back to school.

[fresco]

I understand complaining about McDonald's from a culinary standpoint, but from a business standpoint? Compare the likely success of them opening a store anywhere to that of any independent and complaints about their business models should just fade away.

They're not trying to revitalize their brand through these other ventures. They're trying to diversify their business interests, which is almost always an intelligent business decision. It's like Disney teaming with Pixar. They're not trying to revitalize Disney's name, they're hedging their bets on the future of animation (and considering how well Pixar has done and how well Chipotle is doing, both seem to be making smart decisions).

I think you should take a closer look at the financial performance of McDonalds. Doesn't look like a company in great shape to me, or for that matter, to Business Week or Standard and Poors...

http://www.businessweek.com/investor/conte..._7104_pi036.htm

[EdS]

I understand complaining about McDonald's from a culinary standpoint, but from a business standpoint?  Compare the likely success of them opening a store anywhere to that of any independent and complaints about their business models should just fade away.

They're not trying to revitalize their brand through these other ventures. They're trying to diversify their business interests, which is almost always an intelligent business decision.  It's like Disney teaming with Pixar.  They're not trying to revitalize Disney's name, they're hedging their bets on the future of animation (and considering how well Pixar has done and how well Chipotle is doing, both seem to be making smart decisions).

I think you should take a closer look at the financial performance of McDonalds. Doesn't look like a company in great shape to me, or for that matter, to Business Week or Standard and Poors...

http://www.businessweek.com/investor/conte..._7104_pi036.htm

McDonald's has been trying to compete on price through heavy promotions and discounts and that has hurt their average per-customer margins. I recall being able to walk out of there with some sort of mini combo for about $2 and people were buying them up. I can't imagine McDonald's was making much money on those as their fixed costs remained the same and these cheapo "meals" were cutting in to their more expensive offerings. My feeling is that if McDonald's were to work on the perceived value of the basic McDonald's "experience", they could hold the line on or even increase their prices and also expand their margins.

[ExtraMSG]

Unlike many businesses, they maintained revenue growth throughout the poor economy that hurt most of the big companies. If you look at Wal-Mart's profit and loss statements, even they've had quarters of decreasing net profits. McDonald's revenue has consistently grown while they've been gobbling up businesses and expanding them. Chipotle had revenue growth of 53%. No analyst questions whether McDonald's will continue to dominate. (btw, that article was from May and McDonald's has consistently improved its performance since then. March was it's low for the 52 week period.)

[fresco]

Part of McD's problem is their emphasis on revenue at the expense of profit. If you like their prospects, I suggest you buy their stock. I wouldn't.

[ExtraMSG]

And likewise, fresco, if you think they're doomed, you should short their stock.

[curlywurlyfi]

Hmmm. At the beginning of last year, Mcdonalds lost about GBP22m on their investment in a coffee bar chain in the UK called Aroma (if I tell you they were all over the Millennium Dome, that will give you some idea of the market they were in) - they sold about 60% of the outlets to I think Caffe Nero. Seems odd that they're trying this (failed) idea again?

[alacarte]

I think that good coffee will be appreciated by Mickey D's patrons, but I seriously doubt that will turn McD into a destination for coffee alone, like Starbucks is.

That said, if I'm in the mood for a McMuffin, I'd probably pony up for a latte too...but only if it's good. I've never bought coffee at McDonald's. I usually spring for a Coke if I'm there, even first thing in the morning.

[Coop]

I loath what MacDonald's has become. They seem to have followed the same path as that other homey 60's California company, Disney. That being said Ray Kroc's widow just passed away and left most of her sizable fortune to various charities and non profit organizations. Including 100 million dollars to NPR.

[herbacidal]

They're not trying to revitalize their brand through these other ventures. They're trying to diversify their business interests, which is almost always an intelligent business decision. It's like Disney teaming with Pixar. They're not trying to revitalize Disney's name, they're hedging their bets on the future of animation (and considering how well Pixar has done and how well Chipotle is doing, both seem to be making smart decisions).

i think developing other brands makes a lot of business sense.

it's just that it's contrary to what they've been saying for a while,

especially since they're calling it revitalizing their brand.

on that matter, MSG, they're doing what makes business sense.

they're just not describing it accurately.

if i'm not mistaken, when the new CEO took over a few years ago.

he indicated that McD's was going back to basics,

and decreasing attention paid to some of their subsidiary brands.

(Donato's, Chipotle, etc.)

have they changed leaders again?

i think full development of those subsidiary brands makes enormous sense.

it is potentially tricky managing multiple lines of business, let alone multiple brands, but done well, there is enormous growth potential.

my feelings on it are above.

[menton1]

This sounds like they are just testing some of the things that work at the McDs in Europe; In Rome, near the Spanish Steps, you will find the largest McDonald's in the world-- on 2 levels, and besides being gorgeous, has wonderful caffe and cappuccino from a separate coffee bar in the front. I loved the coffee, never ate any of the food, of course!!

[caroline]

The McDonald's in Buenos Aires have coffee bars in front. I assume they do it because otherwise they could not compete with the confiterias on every corner all of which offer excellent coffee and cakes. I did not have a chance to sample the coffee but the equipment looked just fine. The torte-type cakes looked excellent and the arm chair seating very comfortable.

For what it's worth, they also deliver,

Rachel

[Jason Perlow]

Actually, I'd like it if someone in Raleigh could check out the McCafe and perhaps take some photos for us. Varmint?

[markovitch]

deleted

Edited December 7, 2003 by markovitch (log)