With McDonald's backing, McCoffee can compete with Starbucks?

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Fifteen years after its launch, McDonald's is going to overhaul its coffee brand McCoffee in the United States.

The fast food giant announced that from next year, McCoffee will offer more promotions, seasonal products, consumer loyalty marketing activities and so on. Now McCoffee is already upgrading its coffee machines in American stores-machines that sell for up to $12000 and are designed to enrich McCoffee's drink line.

As soon as McDonald's voice ended, everyone speculated: is this the pace of competing for business with Starbucks?

(photo caption: "McDonald's versus Starbucks" has become a hot topic in the media; source: screenshot of Google News)

Many students must want to ask: China, as McDonald's third largest market in the world, and coincides with the national craze for coffee, when will the upgrading and transformation of McCoffee come?

No hurry, let's first take a look at the current living situation of McCoffee in China.

At present, the size of McCoffee's about 800 stores in China is really not comparable to Starbucks' more than 2400 stores. Even the entire number of McDonald's stores is barely close to Starbucks.

After McCoffee entered China in 2010, relying on McDonald's restaurant advantage, McCoffee quickly gained 5.4 per cent of the domestic chain coffee market, on a par with COSTA, but there has been no breakthrough since 2012-the share of the two companies is also lower than that of Shangdao Coffee and Cross-Strait Coffee in the two local markets, according to statistics from Euromonitor International, a market research firm.

On the contrary, it is Starbucks, which has made great progress in recent years, and has an exclusive market share of more than 40% in 2015.

If you analyze the product practice in more detail, you will find that McCoffee is not to blame for others.

According to the menu information collected by DT Jun in three foreign brands, McCoffee, Starbucks and COSTA (Shangdao Coffee and Cross-Strait Coffee include catering services, which are not included here), McCoffee has the lowest number of coffee products among the three-45, less than half of Star's (96, excluding beans).

Take a closer look at the category distribution of the core product coffee, which looks more like the deficiency of McCoffee.

40% of McCoffee products are supported by dim sum, and there are only 9 types of real coffee (excluding snow and ice), accounting for only 20%. Such a combination, calling it a coffee brand, does make some people feel "unworthy of the name".

By contrast, McCoffee's direct competitor, COSTA, which has a small number of products, is the most focused on selling coffee (40 per cent).

While Starbucks is promoting light foods, such as Chawana, Kosong and NFC juice, they are all popular in stores, but according to DT Jun, Starbucks' coffee still accounts for more than 35% of its products.

After all, McCoffee is not a professional player, and McCoffee inevitably lacks advantages in terms of products, but when it comes to services, especially in keeping up with the trend of the Internet, McCoffee can enjoy McDonald's "construction resources" and is very approachable in China.

For example, in terms of mobile payment, McCoffee can provide Alipay, WeChat Pay, QQ Wallet and other mainstream mobile payment methods in China. By contrast, Starbucks lags behind a lot in China-the main ApplePay is not very comfortable in China, and it is not until now that it has finally welcomed its first local partner, WeChat Pay.

Let alone make an approachable takeout like McDonald's.

(photo caption: in addition to Starbucks, McCoffee and COSTA have launched official takeout services in China; source: Baidu takeout screenshot)

From the point of view of the market, compared with its direct competitors, McDonald's is weaker in hardware (products) but stronger in software (services), which is exactly what McDonald's intends to make up for, enriching its product line, especially the variety of coffee, is its future direction.

However, for the future positioning of McCoffee, compared with Starbucks to explore boutique ideas, McDonald's believes that cost-effective high-quality coffee is their goal.

In the first quarter of next year, McCoffee US stores will launch more affordable US $1 drip coffee and US $2 boutique coffee-if it can be "translated" to China (DT note: McCoffee's existing coffee products are roughly the same after the US-China price conversion), not only further lower its existing coffee product price system, but also continue to open the price gap with Starbucks and COSTA.

Don't forget that Chinese consumers who are more sensitive to price are very fond of "cost-effective".