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Ray Kroc would never have dreamed that McDonald's would go into combat in a war over coffee, the fact it's doing so is a testament to the work of Howard Schultz and Starbucks.

The elevation of the coffee experience in America has been done by Starbucks and now the fast food guys want a share of the lucrative pie.

Clealry, McDonald's is striking from a position of strength and Starbucks is at one of its weakest points.

Purists could argue that McDonald's developed the third place concept first by providing an alternate destination to home for families, but then failed to build on the concept and make it relevant to different audiences, which allowed Starbucks to seize that territory.

In the end, this is all about a consumer win and the need for brands to meet consumer needs to remain relevant.

McDonald's realized four years ago, quite correctly, that the old brand experience was not sufficient to compete in today's marketplace and the upgrade which started with the menu by adding salads and new items, has now been expanded to include improvements to the facilities and the decision to take coffee seriously.

If consumers have been trained by Starbucks to expect a better cup of coffee, there's no reason McDonald's should't give it to them.

There are a couple of critical questions here.

1. Can McDonald's make a decent cup of coffee?

2. Will consumers trust McDonald's to make good coffee?

3. Do consumers want to be drinking a decent cup of coffee in McDonald's?

4. What can Starbucks do marketing wise to "own" coffee?

5. What can Starbucks do to show the superiority of their experience?

Yesterday, Starbucks announced the return of Schultz with the goal of bringing the service obsession back to the brand. The board clearly looked at the sales data and re-read Schultz's memo from last year and decided enough was enough.

The blue touch paper has been lit and Starbucks once shy of advertising will now get on with selling its pitch, it will be interesting to see how McDonald's responds, but it's likely to be with some shock and awe, that's the way they like to do things in Oak Brook.

In the end, McDonald's can crush Starbucks with its marketing spend, but the real test will be on the fronline and this is all about Schultz, if he can bring the magic back to Starbucks and add some creative new touches, McDonald's will take some share, but not much, if he can't, the losses might be considerable.


Posted by Ed Cotton This Sunday's New York Times had a good piece on how McDonald's is changing its image in Europe localizing menus, which it has done for years, but more recent efforts have been focused on store design. The article had a good slideshow, but I dug up some other examples, that show just how far the brand is pushing to be relevant in Europe. It's probably just a matter of time before some of these design initiatives come to the US.

McCafe in Germany


McDonald's in Germany



McDonald's Milan, Italy




Posted by Ed Cotton In the last couple of years, the term, Innovation, has risen and fallen from star to cliché.

Mention the word to many marketers and their c-level brothers and sisters, and they will give you a perplexed look. There’s the perception that innovation is hard and complex. It’s not achieved easily and not to be undertaken by anyone without sufficient stamina. The most popular misconception is that it’s hard because it’s all about breaking through with a radical idea.

Sometimes innovation can happen in a much simpler way.

Take the fast food giant, McDonald’s and it’s latest pride and joy, the snack wrap.

Developed by Dan Coudreaut, the company’s director of a culinary innovation.

He was given the brief to develop a new chicken item that would work well for takeout.

Coudreaut developed 85 ideas that met the brief including one called a “tacadilla” which failed in consumer testing.

His solution was to create something simpler.

According to the Wall Street Journal.

“He took breaded chicken used in the restaurant's Chicken Selects strips, topped it with shredded cheddar jack cheese and lettuce, added a few squirts of ranch sauce and wrapped it in a flour tortilla. McDonald's called it a snack wrap and put it on the menu for $1.29.”

The Snack Wrap is one of the most successful product launches in McDonald’s history and was mentioned yesterday as a major contributor to the company’s 4.8% worldwide growth for the month of April.