Saturday, May 23, 2009

McCafe heats up Mickey D’s

Some analysts are upgrading McDonald's stock based on the success of the McCafe program. The barista units have been installed in about 10,000 of the chain's 31,000 units.

Not content to build it and figure that they'll come, the company is making sure that everyone on the planet knows about its new offering. They are laying out a whopping $100 million in a marketing campaign that includes TV, outdoor, radio, print, and web (right now, there's an iced mocha staring at me from my Weather Channel desktop app).

Even at the relatively low price of about three bucks the product cost is great, not much more than about 10%. In the short term, with marketing keeping up barista business levels and sales strong, it's a winner.

The test of the program will be a year from now when the focus is on something else. Will lower-volume, even medium-volume, locations be able to keep the McCafe stations staffed? Or will the cashiers end up steaming the milk and bring the lines to a screeching halt?

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