McDonald’s vs Tim Hortons: Giants face off in battle of the smoothie
John Betts, CEO of McDonald’s Canada, sips on a blueberry-pomegranate smoothie, one of three flavours being launched across Canada today as part of a long rebranding process that has put the chain known for burgers into Tim Hortons territory.
McDonald’s is going after the beverage industry, a landscape dominated by Tim Hortons in Canada with 3,295 stores and 41 per cent of the quick-service-restaurant (QSR) traffic.
As of today, 925 of the 1,400 McDonald’s in Canada will carry the McCafé Real Fruit Smoothies. The remaining restaurants are expected to carry them by the end of 2012.
The smoothies are just the latest salvo in a battle over beverages between the competitors that has seen them each launch specialty coffees including lattes, cappuccinos and espressos – a market Starbucks used to have mostly to itself.
Tim Hortons launched fruit smoothies last spring.
“We’re flattered that they have seen our successes in the beverage business,” said Dave McKay, director, brand marketing beverages for Tim Hortons.
The chains are also battling over breakfast, with Tim Hortons innovating variations on the breakfast sandwich pioneered by McDonald’s 30 years ago with the Egg McMuffin.
Not that CEOs like Betts are in the habit of naming their competitors. Or admitting they have any.
When asked who McDonald’s biggest competition is, Betts answers that it’s McDonald’s.
In 2002, McDonald’s stock was trading at $12 (U.S.) a share. Management was focused on building new stores. Revenues were being driven by new franchisees, but the franchisees were taking sales from each other.
“It’s not a recipe for success in the long term…you’re cannibalizing,” said Betts, sitting in the ground-floor restaurant for employees at McDonald’s Canadian headquarters near Don Mills and Eglinton.
McDonald’s stock is trading at around $97, thanks to an eight-year rebranding process that included renovating stores to make them more comfortable and modern, expanding the menu to offer healthier foods and aggressive marketing campaigns, including free coffees to publicize McDonald’s coffee is made with 100 per cent Arabica beans.
The remodeling was needed to equip restaurants with the ability to offer new menu items, like the smoothies, and also to create a new atmosphere at McDonald’s, moving it from plastic and primary colours to muted tones, plasma televisions and fireplaces. And free WiFi.
“You walk into a McDonald’s, you see laptops. You never used to see that,” said Betts.
Source: thestar.com