McDonald’s is a brand currently ranked ninth in the world with a net worth of over $42 billion. It’s a household name built on convenience, affordability, and a family-friendly environment. To continue to meet the evolving needs of both adult and pint-size patrons, McDonald’s is always on the lookout for ways to keep its menu fresh and cost-effective.
With the continuously growing demand for more health conscious options on-the-go, McDonald’s expanded its menu to accommodate those consumer needs with salads, smoothies, and fresh fruit. Those at McDonald’s have answered market demands for more transparency into what their consumers are eating by adding nutritional information to the packaging of certain products. But before these trends took priority, there was one product that skyrocketed McDonald’s into the running for top global brands: coffee.
The introduction of McDonald’s premium roast coffee in 2006 initiated a somewhat unexpected challenge between itself and the existing leaders in the coffeehouse space. In fact, the year McDonald’s entered the coffee market, it was responsible for selling one in 10 coffees purchased outside of the home, and in 2007 Consumer Reports reported that McDonald’s java was actually preferred over the obvious candidates, Starbucks and Dunkin Donuts. But the fact remains: it’s still a hamburger joint whose primary product is not, in fact, coffee. Partnering smart, creating unified brand recognition, and escaping the lure of the fast fad attraction are three essential needs for long-lasting success.
Utilizing the Buddy System
With more than 70 percent of coffee consumption in the U.S. still taking place at home, McDonald’s has realized the growing need to offer McCafé products for retail purchase, expanding its customer reach to coffee pots and one-cup machines in homes across the nation. This type of expansion is normal for popular brands to avoid pigeonholing themselves into just one industry. Joining the likes of Starbucks and Dunkin Donuts, McDonald’s and Kraft Foods announced a partnership in 2014 to package the McCafé coffee varieties and flavors of the $11 billion U.S. retail coffee market.
A Give and Take
With its foot in a new door, McDonald’s is forced to consider an entirely new set of standards to sustain the success it has already built alongside its golden arches. While some challenges can be easily rectified by the power of two, for many partnerships, balancing the load of an entirely new endeavor can be difficult. Together, McDonald’s and Kraft share the weight of some important steps for a successful partnership and product launch.
Communicate internal requirements and share data without the convenience of shared IT resources—a major risk for communication breakdown. To avoid this, both McDonald’s and Kraft will be forced to become transparent with one another about all supply chain operations. Ensuring this visibility has proven difficult given that so many integral steps in the process take place outside the four-walls of a brand’s facilities. Most organizations that have had experience with this find automation to be essential. Paper-based processes are inefficient, prone to errors, and often make it difficult or impossible to identify issues and trends as early on in the process as possible. Software companies are beginning to leverage the cloud to connect the dots in the partner network to streamline data sharing and resolve issues and complaints proactively. It helps to create transparency across all supply chain partners—not just tier one suppliers—to protect the brand and to retain the customer base by delivering the best consumer experience possible. By implementing the cloud into these processes, a brand owner has the ability to share all complaints with every one of its suppliers to quickly and efficiently investigate the issue at hand, determine a root cause, and implement a corrective action to ensure the issue has been resolved. This technological advancement enables brand owners to not only increase collaboration with their suppliers and partners, but also reduce the significant costs associated with poor quality.
Manage global coffee suppliers, coffee roasters, and contract manufacturers and packagers to ensure safety, compliance, and brand reputation. There is typically little visibility into food safety management programs or quality processes at suppliers’ facilities. Many coffee roasters are sourcing their coffee from up to 40 different countries and are faced with the task of supplying tens of thousands of commercial customers with coffee products. The gaps that form within a supplier’s processes from communication breakdown or unresolved errors further increases the risk to a brand’s food quality and social compliance sourcing strategy.
Maintain individual brand values while encouraging customers to embrace a new product, with combined forces of both partners. In a world where a tweet can reach millions of people in a few seconds, organizations know the importance of keeping a close eye on their target demographics. By maintaining a unified voice around core values while encouraging customers to stand behind a fellow brand, McDonald’s and Kraft can better achieve the acceptance and market adoption they hope for.
Don’t be Fooled by Fads
Once at the pinnacle of the cupcake craze, Crumbs Bakeshop tried to branch out beyond baked sweets after the initial cupcake bubble had burst by offering lunch items such as sandwiches and salads, but had no such luck. Crumbs also entered the supermarket world in hopes of reclaiming some portion of its original popularity, only to file for bankruptcy and close its doors shortly afterwards in July 2014. Why? A combination of market saturation and not enough consumer demand contributed heavily to the demise of those sweet offerings. Also, the lunch offerings, while smart for brand expansion, weren’t reaching even a fraction of the association that the brand got for its cupcakes—presenting a major gap in brand recognition.
These implementations are, by no means, small feats to execute (as seen in the case of Crumbs Bakeshop). Together, McDonald’s and Kraft will need to meet (and in some cases, exceed) their own expectations for a successful rollout. This will take a great amount of patience and accuracy to get right for both McDonald’s and Kraft. All of which lie on top of their end goal to provide customers with a quality product that meets the expectations they have when visiting the store in-person. The best way to reach this is to maintain transparency in all operations, triage potential errors/challenges as a united force, and project a consistent brand image.
Kuchinski is VP of product marketing for Sparta Systems. Reach her at [email protected].