It is coffee that is driving Mac Donalds sales!

by chee Leng (on coffee makers)
(Singapore)

For the 1st quarter of this year, Mac Donald's posted a better than expected, better than industry average growth!

Overall, it posted a 6% growth, whereas the whole industry are not expecting a growth rate of more than 3 over percent.

In fact, its highest growth areas come from Asia, Middle East where is recorded something like 6.5% of growth.

Even in US, where everything is slow, it is growing at 4%.

All these can be accorded to one single product -coffee.

Sure, there are the promotions, burgers, and fries, but the only one that keeps consumers coming back and one where Mac Donalds really have a price edge over the rest of the QSR or even cafes is the coffee.

In an earlier article, we saw how consumers are more loyal to Mac donalds coffee compared to the rest of the big chains -even better than Starbucks.

Read about: consumers loyalty to MacDonald's coffee

But, growth might slowed down this year primarily due to its pending price increase which might turn many consumers off.

And it has to realign its happy meals (might not be able to use promotional toys inside), which might lead to the loss of lucrative merchandise deals and also suffer a dent in the children market.

Then, it is going to reinvent itself with a entire make-over. I wonder if the new look and feel would alienate any consumers that are so used to the look for more than half a century.

Its only hope is to grow the Mc Cafe, having enjoyed tremendous success from it.

My $0.02.

With Starbucks pursuing a retail model, and other F&B outlets not really doing much to grow the coffee business, Mac Donalds have a really good chance to expand its coffee range.

It has garnered a ready group of drinkers and captured substantial market share, and if it stay the course, there is no doubt that coffee could be the star product that contributes to its top and bottom line in 2011.