McStarbucks – a new joint venture

By paul.fabretti / May 8, 2006 / Uncategorized / 4 Comments

Soft furnishings, soft colours, carpet…make mine a Mocha Frappucino with a Quarter Pounder with Cheese!

The image you see to the left (courtesy of Seth Godin) is the new layout for Macdonalds in the US and signals an interesting departure from the current bright lights and plastic layout.

Seth ponders on the dfilemma of whether or not this is a move aware from the trusted and proven environment that Macdonalds customers are used to. But my biggest thought is this: Macdonalds is a FAST FOOD restaurant. Quick in, quick out…low margins but high churn rate.

How can Macdonalds (who provide a meal which is eaten far less frequently than coffee is drunk) expect anything like the returns they already achieve?

Furthermore, by providing a “lounge” envorinment whereby people are encouraged to spend longer dining, it is only going to open Macdonalds up to criticism about diet again.

At least Starbucks (with its equally priced products) can get 2 or even three coffees out of any long-term residents, but can Macdonalds really expect to get the same 2 or 3 meals out of ITS long-termers?

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  • Ann Handley

    I walked into one of the newly renovated McDonalds near Boston’s
    Faneuil Hall and you know…it was actually kind of nice. I mean, same
    food lines…same surly staff…same aura of grease in the air. But the
    muted tones and comfy chairs actually gave the place a nicer overall
    feel.

    The truth is…I was there to use the bathroom. But if someone held a
    gun to my head and made me stay and eat some fries…I think I wouldn’t
    have minded *quite* so much as I mind those awful molded plastic
    seating. And if they add WiFi I *might* be rethinking my choice of
    coffee spot.

  • http://blendingthemix.com paul.fabretti

    I appreciate your comments and still agree that the new restaurants (from what photographs I have been able to source on flickr and google) are very attractive and appealing, and as you say, with the addition of wifi (even here in the UK) if the soft-look rolls out worldwide, it would make McD’s an interesting alternative to the coffee houses.

    But, I still believe very strongly that they are only an alternative. Admittedly people dine at McD’s at varying times throughout the day, but I would always argue that there will be peak periods where soft-furninshings will serve only to retain those people who have already eaten and are nice and comfirtable.

    From a coffee-shop competition point of view, unless the coffee they serve has some sort of wonderful reputation (and, OK it is not like dishwater!), I cannot see a significant migration to McD’s – after all, as you say, the greasy air is second only to the food in terms of unpleasentness!

    Another thought I had was that McD’s are trying to grow up with the generation with which they saw the most growth? Now they are in their late 20′s/early 30′s maybe they would appreciate more comfortable surroundings?

    But, ultimately, I cannot see how slowing the churn down so people inevitably stay longer will improve their business – but maybe that’s why I sell bathrooms!

  • http://labsji.wordpress.com Balaji Sowmyanarayanan

    Making People wanting to stay linger on is the best thing McD coud do to its business. Once they stay, churning out products to serve them is easy next step.

    There is democratization dynamics involved in making lounging available at McD. As more people adopt coffee/lounging culture, it opens up tremendous expansion opportunity for McD.

  • http://blendingthemix.com Paul Fabretti

    I absolutely agree with you Balaji, but I raise the point again that what is there in the pipeline that will encourage people to stay longer at McD’s per visit?

    With the cost involved in the research and planning of such a redesign, pressure will be on to get a decent return on investment and a quick one at that. But I have heard of no impending product lines which will bring this about.

    McD’s can only make this coffee lounge culture (long-term customers) pay for them if they are able to get customers to spend more money or more items in the same period of time.