Bring on the Bean: Coffee Takes Center Stage on QSR Menus

When it comes to meeting their daily coffee fix, customers are looking for convenience, affordability and great taste. QSRs contemplating elevating java on their menus should proceed with caution: their patience could boost marketability and reap financial rewards. 

“Consumers don’t take lightly to being served bad coffee,” says Joel Cohen of RestaurantMarketing.com, a nationally recognized restaurant marketer through consulting and speaking. “You can’t suddenly become an expert in coffee. It doesn’t instantly happen. You need to take a gradual approach and first gain consumer confidence.”

Early and recent success stories

Donna Alsheimer, hospitality and communication manager at Au Bon Pain calls the restaurant chain a “pioneer,” one of the first QSRs to offer specialty coffee. In the early 1990s, the company collaborated with Bill McAlpin, owner of Hacienda La Minita to develop a blend from the famed Tarrazu region of Costa Rica called El Indio. Au Bon Pain was one of three restaurants in North America to receive a certificate of appreciation from the President of Costa Rica, thanking the company for supporting the industry by paying a quality premium for their coffee.

McDonald’s introduced its espresso-based McCafé line this past May after two years of testing, according to Danya Proud, senior manager of U.S. media relations. “Coffee is not new at McDonald’s,” she points out, referring to its origins in the mid to late 1980s, through its adoption of one regular-drip standard blend in 2004 and a premium roast blend introduced two years later.

“We’ve always been a breakfast-category leader in sandwiches, so we looked at expanding one piece of that, and taking some share of a $60 billion business in the QSR industry and becoming a bigger player in breakfast,” Proud says. “McDonald’s has been about more than burgers and fries for a long time.”

McCafé’s line of premium coffees, espressos, hot and iced mochas, lattes, cappuccinos and hot chocolate have proven a hit with customers. The company’s investment reports show U.S. sales increases up between 1.7- 2.6 percent during July and August, a jump partially attributed to the coffee push and new Angus burger launch.

“We’ve always been a breakfast-category leader in sandwiches, so we looked at expanding one piece of that, and taking some share of a $60 billion business in the QSR industry and becoming a bigger player in breakfast. McDonald’s has been about more than burgers and fries for a long time.”

Danya Proud, senior manager, U.S. media relations

Cohen says McDonald’s foray into coffee was successful because it got carried out in stages. “They jumped into the coffee market by first gaining consumer trust. They started a while back using superior premium coffee. People loved it and talked about it. After product trials for years…it became common knowledge that McDonald’s serves great coffee. Once that confidence was in place by consumers, McDonald’s forged ahead with having it as an all-day product. But it takes years and years to become known for something.”

Proud downplayed media talk of a rivalry with other coffee-based chains and said McDonald’s business thrives because of its brand, knowledge of the QSR segment, “unrivaled menu value,” and loyal following.

“This is not about anyone else. It’s our customers and what they are looking for from us. We are exposing people to these indulgent beverages…typically sold at higher prices…and here they are available for less. We give value that is unique to McDonald’s.”

No cause for alarm

Dunkin’ Donuts is unconcerned over perceived competition from other QSRs into their coffee “turf.” Pointing to its nearly 60-year coffee heritage (the first Dunkin’ Donuts opened in 1950 in Quincy, Mass.), the company stresses its product’s quality as well as the use of 100 percent Arabica coffee beans and its own specifications that are recognized by the industry as a superior grade of coffee. 

And, the company emphasizes statistics such as annual sales of 1.5 billion cups of hot and iced coffee and the #1 ranking for customer loyalty in the coffee category by Brand Keys Customer Loyalty Engagement Survey for 2007, 2008 and 2009.

“The passion for Dunkin’ Donuts is unmatched,” says Scott Hudler, senior director of brand marketing.

So how does Dunkin’ Donuts set itself apart from a growing number of QSRs elevating coffee on their menus? According to Hudler, the answer is taste. “As proven in a recent national consumer taste test against Starbucks, Dunkin’ Donuts coffee tastes better…‘DDQ’ has become a universal standard in the industry for premium coffee and it actually stands for Dunkin’ Donuts Quality.”

Affordability and convenience also matter.

“No other brand can match us. People love Dunkin’ Donuts because they know they can get high-quality coffee and food that will keep them running all day, and most importantly, they get in and out without having to spend a lot of money,” Hudler says.

“And in this economy, now more than ever, for the consumer it’s not about fancy couches or music or WiFi. It’s about getting in and out of the store with a great product at a great value. That’s what customers know we’re about.”

Although Dunkin’ Donuts offers eight flavors including coconut, blueberry, raspberry and cinnamon, and introduced a line of espressos and lattes made with 100 percent Fair Trade™ certified coffee in 2002, regular hot and iced coffee beverages still remain the most popular. And the company continues to innovate to bring new products and flavors to consumers, Hudler said.

Words to the wise

During his interview with QSR Buzz, Cohen advises restaurant operators to highlight their restaurants’ strengths and not worry about what others are doing.

“These places don’t have to fight back or try to ward off competition. It’s more about having the ability to serve each niche in a great manner,” he says. “Convenience is a huge factor for Dunkin’ Donuts and McDonald’s. At Starbucks, it could be convenience, but it might be the experience. For me, it depends on who I’m with.…If I have little kids with me, I’d probably go to McDonald’s. In another situation, it could be Starbucks….They all have different niches and should just emphasize what they do well.”

During these turbulent economic times, should QSRs even try to push new products like coffee to the forefront? Cohen replies, “There’s never a bad time for businesses to branch out as long as you have something in mind that your market would like. It’s always a good time.”