McDonald's recent announcement that it would be soon be handing out free coffee at its U.S. restaurants for two weeks set off wide speculation about how serious the fast food chain is about coffee, both at its own locations and in grocery aisles.
From March 31 to April 13, free McCafe coffee will be available during breakfast hours. "Make Friends with McCafe" sampling events are also being hosted at high traffic locations and transportation hubs in multiple cities across the country. A Twitter campaign is also involved.
Here is a sum-up of the three core theories about McDonald's coffee push:
Breakfast turf: Some see the free coffee campaign as foremost a natural response to ongoing breakfast wars. On March 27, Taco Bell launched TV commercials featuring various people named Ronald McDonald endorsing its new breakfast menu. Dunkin' Donuts has become a fierce competitor in the breakfast space. In early March, Starbucks unveiled four new breakfast sandwiches inspired by the La Boulange bakery it acquired.
Third-place: The McCafe lineup's arrival in 2009 — including drip, iced, espresso, and frappés — was seen by many as a direct thrust at Starbucks' all-day, leisurely-break crowd. Free Wi-Fi and earth tone colored walls were also added. In some locations, separate counters with display cases for coffee and bakery items arrived. The results in the U.S. have been mixed, with drip coffee taking off but espresso lagging.
Regardless, at an investor meeting last November, McDonald's listed enhancing its "coffee culture" as one of its primary goals, according to Bloomberg News. Noting that McDonald's still only has 12.8 percent of the "informal eating-out" coffee market, Kevin Newell, chief brand and strategy officer for McDonald's USA, said the chain is now "treating coffee quite frankly as critically important as we do our iconic fries."
Grocery aisle: Some weren't surprised that the promotion arrived amid reports that McDonald's partnership with Kraft Foods has begun testing bagged McCafe in retail stores. McCafe Premium Roast coffee has been sold in Canada's grocers since late 2012, but Burgerbusiness.com reported that a Wegmans supermarket in Mechanicsburg, PA was selling a wide selection of McCafe coffee, including Premium Roast, Breakfast Blend, French Roast and Decaf Premium, with ground priced at $7.29. Several varieties of McCafe K-cups were also being sold, with many expecting single-serve cups to drive the category in the years ahead. Mintel predicts the single-serve-pod market could account for 50 percent of coffee sales by 2018.
Where do you see the greater opportunity for McDonald's to grow its coffee business?