McCafe breaching coffee market
McDonald’s: Breaching the Luxury Coffee Market
Daryl Coleman
Connie Gao
Heejae Kim
McDonald’s Corporation, the world’s largest fast food restaurant chain, owns and franchises more than 31,000 restaurants in 120 countries.1 McDonald’s owes much of its success to the standardization of its fast food products, which include the Big Mac and the Happy Meal.
McDonald’s has had a reputation of serving cheap, quick, and unhealthful foods. Recently, documentaries such as Super Size Me has tested that reputation and induced the corporation to adopt a more health-conscious stance by introducing healthier items such as salads and wraps to the menu. Nonetheless, McDonald’s revenues are steadily increasing, growing 27% over the three years ending in 2007. Estimated total revenue within the fast-food world market in 2007 was $120 billion, with McDonald’s leading with a 19% market share over major competitors such as Doctor’s Associates, Inc. (Subway) and Burger King.2
Figure 1. 2007 Total Revenue of McDonald’s and Fast-Food Major Competitors
Strong and growing profits in the fast food sector show that McDonald’s has been doing the right things by extending into developing world markets such as China and Latin America.
Recent strategies have focused on introduction of innovative products to the menu to accommodate changing consumer preferences and cultural differences. Increasing sales at existing restaurants is the current strategy. McDonald’s has remodeled many of its restaurants to make them more appealing and modern, as well as extended store hours.
1
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http://www.hoovers.com/mcdonald%27s/--ID__10974--/free-co-profile.xhtml http://www.wikinvest.com/stock/McDonald%27s_(MCD) 2
Coffee
A new market that McDonald’s is trying to enter in the United States is the luxury coffee market, a market revolutionized by Starbucks Corporation. McDonald’s has already begun its infiltration by introducing its own espresso
Daryl Coleman
Connie Gao
Heejae Kim
McDonald’s Corporation, the world’s largest fast food restaurant chain, owns and franchises more than 31,000 restaurants in 120 countries.1 McDonald’s owes much of its success to the standardization of its fast food products, which include the Big Mac and the Happy Meal.
McDonald’s has had a reputation of serving cheap, quick, and unhealthful foods. Recently, documentaries such as Super Size Me has tested that reputation and induced the corporation to adopt a more health-conscious stance by introducing healthier items such as salads and wraps to the menu. Nonetheless, McDonald’s revenues are steadily increasing, growing 27% over the three years ending in 2007. Estimated total revenue within the fast-food world market in 2007 was $120 billion, with McDonald’s leading with a 19% market share over major competitors such as Doctor’s Associates, Inc. (Subway) and Burger King.2
Figure 1. 2007 Total Revenue of McDonald’s and Fast-Food Major Competitors
Strong and growing profits in the fast food sector show that McDonald’s has been doing the right things by extending into developing world markets such as China and Latin America.
Recent strategies have focused on introduction of innovative products to the menu to accommodate changing consumer preferences and cultural differences. Increasing sales at existing restaurants is the current strategy. McDonald’s has remodeled many of its restaurants to make them more appealing and modern, as well as extended store hours.
1
2
http://www.hoovers.com/mcdonald%27s/--ID__10974--/free-co-profile.xhtml http://www.wikinvest.com/stock/McDonald%27s_(MCD) 2
Coffee
A new market that McDonald’s is trying to enter in the United States is the luxury coffee market, a market revolutionized by Starbucks Corporation. McDonald’s has already begun its infiltration by introducing its own espresso