mc donalds owners eye starbucks with

MGM221PRESENTATION

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Cover page! I am not too good at this^^

ABOUT THIS ARTICLE&

ABOUT MCDONALD’S

McDonald’s company background

• franchise company • founder Ray Kroc • >30,000 local restaurants • serves 52 million people in over 100 countries• >70% restaurants owned & operated by local peo

ple

Julia

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julia

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• Popular food: French Fries, Big Mac, Chicken McNuggets

• competitors: fast food stores --> Burger King (food), Starbucks (Beverages)

• customers: mainly families with children --> more young adult customers

• will add other beverages next year

McDonald's owners eye Starbucks with McCafe drinks

• McDonald’s offers McCafe espressos and cappucinos at 14,000 US locations

• McCafe’s coffee drinks cost less than StarBucks, from $2.39 for a small to $3.29 for a large

• McDonald’s first gained revenue from offering coffe in the breakfast menu

• “Beverages have higher margin than food” • Offers Lower price “affordable luxury”

McDonald’s strategy to gain market share from Starbucks

• Next annual sales: $1 billon

• Continue improve their coffee bean quality to compete with StarBucks

• Advantage by offering food and coffee while StarBucks only has muffins and coffee

• Draw attention to price sensitive customers

• US economy downturns

improved furniture and free Internet service• Attract people to come and sit in McDonald’s as they do in Starbucks

Jenny will explain what’s this commercial..

McCafe and the Investors-Christine and Judy

• Hefty return on sales– Expecting additional $1 billion to annual sales – Expect more money retained within the

company or give out dividends – Increase operating expenses

What can investors expect?

• Higher revenues• Strong market advantage in new coffee market• Higher share prices• Increase in sales• Greater return on investments > McDonald’s raised dividends 33%• Continuous growth with second beverage wave

McCafe – The Store

What is a McCafe store?

• Starbuck’s-like coffee shop

Different kind of drinks McCafe offers

Frappes

Iced latte Iced mocha

smoothie Bottled water

tea

Macchiato Flat white espresso

cappuccino

Long black

Iced coffee

vienna

Hot chocolate

Spring 2001: first McCafe opening in US

> Test run in downtown Chicago

How will investors be affected?

• New source of growth >New restaurants reaching point of diminished returns

• Commercial (?)

• Increase in revenues

McCafe and the economy

• New Bailout Plan