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McDonald’s, in need of a morning jolt, is giving away coffee

The fast-food giant is debuting its new-look McCafe this week with a pay-it-forward promotion.
mcdonalds refresh
Photograph courtesy of McDonald's Corp.

McDonald’s hopes to boost its breakfast sales by giving away one of its key products: coffee.

And it’s hoping customers will fuel the giveaway themselves.

The Chicago-based fast-food giant is kickstarting a “McCafe It Forward” promotion this week. Starting tomorrow, it will give away 500 cards good for a free coffee to select coffee-loving customers or “individuals known for demonstrating kindness in their communities.”

The card is good for a free small cup of coffee through Friday. The initial customers are encouraged to pass the card along to a friend or stranger, who are in turn encouraged to pass it on further until the cards are deactivated Friday.

McDonald’s hopes the cards will kick off a “ripple effect of goodness.” It also is giving away free coffee for life to five “Brew-Gooders” nominated by friends through the end of next month on BeABrewGooder.com.

The efforts offer the company a chance to highlight new McCafe branding that makes its debut this week.

McDonald’s recently revealed a new design for its cups and pastry bags and other takeout packaging. The design features gold cups for hot drinks that are certified by the Forest Stewardship Council. It has a new tag line, too: “Good is brewing.”

“This latest update is a natural evolution of the steps we’ve taken to modernize the brand experience and deliver growth,” Linda VanGosen, McDonald’s vice president of menu innovation, said in a statement.

The company debuted its beverage-focused McCafe sub-brand in the U.S. a decade ago as part of an effort to defend its all-important breakfast business. The brand featured an upgraded coffee, considered vital to the morning daypart. It has since added cold coffee drinks, espresso beverages and smoothies, among other products, as well as pastries.

McDonald’s said it sold 822 million cups of coffee in the U.S. last year, or about 1,600 cups per minute. The company said that the sub-brand has evolved into “a significant segment of the McDonald’s business.”

But the company is shifting its McCafe branding now, at a time when its breakfast business is again in need of a shot of caffeine.

McDonald’s has seen traffic stumble the past 18 months, with much of the blame pointed directly at its morning daypart.

Competition in that market has grown intense, as both fast-food chains such as Taco Bell and Burger King and traditional coffee players Starbucks and Dunkin’ have grown aggressively and taken share.

“There are plenty of other entrants competing in the breakfast market,” CEO Steve Easterbrook said last month, according to a transcript on financial services site Sentieo. “We don’t have it all our own way, the way perhaps we used to back in the day.”

McDonald’s has been aggressive in recent quarters to fix that problem and improve its own competitiveness.

It has unleashed some breakfast-only offers, notably Donut Sticks, which were designed to complement the company’s coffee. It has also given markets the right to remove some items from their All Day Breakfast menu, in part to improve simplicity but also to give consumers more reason to come to the restaurants in the morning.

Those efforts did yield some traction last quarter. “We did see a better trading performance from the breakfast daypart in quarter two,” Easterbrook said. “Plus, we did see some strong results out of the McCafe initiatives and the Donut Sticks that we launched in the first quarter.”

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