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In an effort to energise sales at home, McDonald’s has had to look for new ways to excite consumers and drive sales.
Tapping into the growing demand for on-trade coffee globally, McDonald’s is increasingly reliant on its successful McCafé brand as an avenue for growth. McCafé is currently the third largest specialist coffee chain by value globally, and while McCafés in other markets typically enjoy separate, and distinct, areas of the store, McDonald’s has no distinct McCafés in the US, opting to offer McCafé products within its standard burger fast food outlets.
After the successful launch of Canada’s first McCafé in late 2015, however, McDonald’s is testing a self-service McCafé kiosk in two separate outlets in the downtown Chicago area to see whether this new format will help entice coffee-crazed consumers in the US. With this kiosk, McDonald’s is likely aiming to get one step closer to replicating the success of its McCafés abroad. Ultimately, this outlet will hope to steal foot traffic from the Starbucks across the street, a microcosm of a much larger experiment in which McDonald’s hopes to compete for share of the global coffee space. Euromonitor International visited the outlet to test the new machine and get a better sense of its long-term potential.
The self-service coffee machine is located in a separate area largely shielded from the regular flow of consumers in front of the outlet’s normal registers. This distinct zone allows consumers who come solely for coffee to order more quickly (emphasised by a description on the kiosk’s side that tells the consumer to, “avoid the line”). Orders and payment are made from a touch screen at the kiosk and the machine starts dispensing the beverage as soon as the payment is made. The kiosk enables the consumer to order and access their coffee more quickly, thus decreasing overall transaction time. McDonald’s will surely hope that decreased transaction time will lead to an increase in transaction volume.
The entire kiosk is sleek, modern, and largely minimalist, and McDonald’s has chosen a particularly modern outlet in which to test the machine. The design of the machine should help attract the attention of aesthetic-oriented millennials, and the design helps make the machine more functional and intuitive. The touch screen streamlines ordering and payment, and guides the consumer through the entire process. From the touch screen, the consumer can make their choice of beverage, all of which cost US$2.99 (or US$1.49 for the Coffee Americano), and make the credit card-only payment.
In a nod to the success of the Corner Café in Sydney, another one of McDonald’s experimental concepts, the cups into which the beverages are dispensed are completely brand-free. While it is possible that McDonald’s may not have developed a specific cup design yet for this particular test-machine, it is also largely possible that the company is intentionally avoiding any mention of the brand in hopes that consumers will be enticed by its brand-neutrality. The minimal branding concept might also cater to millennials that largely prioritise quality over branding, and can be put off by over-marketing. McDonald’s does have a distinct McCafé cup that it uses for its over-the-counter coffee in other US-based outlets, but a plain white cup with a plain sleeve is used here.
Likely drawing inspiration from the Create Your Taste concept in which customers can use an in-store touch screen to make customisable burgers in Australia and some select other markets, the touch screen at this kiosk allows the consumer to choose between several coffee-based drinks as well as hot chocolate. After choosing the type of beverage, the consumer is given the choice to add customisable amounts of sugar and cream, in the case of the coffee Americano, or whether to add espresso or flavour shots in the case of the espresso-based coffee drinks. The machine then adds these preferences automatically when brewing. All prices are set regardless of customisation.
While it is unknown whether more of these kiosks will be added to other outlets in the US, or even whether these particular kiosks will be permanent, there are some important takeaways. First, the use of a self-service kiosk is largely in line with McDonald’s efforts to cut down on operational costs in order to drive profit growth. While the company has been experimenting with ways to make the consumer experience more premium, consumers in the US increasingly look to fast food chains as the cheapest possible option when dining out.
Fast food chains, in response to this trend, have been challenged with both keeping the price to consumers low while maintaining a more premium image that can compete with emerging fast casual concepts and premium burger chains, all the while remaining profitable. Chains have had to cut down on operational costs or streamline operations when possible, and integrating technology to regular operations is one way to help cut down on labour costs, especially while the minimum wage is set to increase in many US states, if not nationally.
Technology is also being used in new and creative ways to enhance the consumer experience and provide consumers with an increased level of control. In foodservice, processes such as mobile ordering and payment are increasingly commonplace. This level of control extends to consumer customisation as well. With the kiosk’s touch pad, the consumer is given the ability to customise their beverage by adding sugar, cream, espresso shots, or flavour intensity, but is ultimately limited to those options, meaning the consumer is given the freedom to design their own preferences, but not too much freedom that it becomes overwhelming. Striking this balance will be important for foodservice automation moving forward.
Lastly, McDonald’s is increasingly looking for ways to compete for market share. With this kiosk, McDonald’s is certainly attempting to compete directly with Starbucks in foodservice. Self-service coffee machines also compliment the shift toward all-day breakfast, a move that was popular with consumers in the US. Apart from coffee, McDonald’s is also looking for ways to stand out in the increasingly crowded burger space. With a flux of premium burger chains like Five Guys and Shake Shack, McDonald’s needs to find ways to diversify income in order to remain profitable.
These kiosks will likely help realise an uptick in coffee sales in those particular outlets of downtown Chicago. The real question is whether the kiosks, if installed in outlets nationwide, will help the company compete with the likes of Starbucks and other specialist coffee chains for market share, and provide a new avenue for growth in the US.