According to media reports, McDonald's Corp.’s MCD Canadian division — McDonald's Canada — recently opened standalone McCafe restaurant in Toronto. Named after McDonald's’ famous coffee, the outlet will serve danishes, breakfast sandwiches, croissants and desserts, in addition to coffee.
The McCafe outlets will not offer the entire McDonald’s menu and only a few selected items from the breakfast menu, such as the popular Egg McMuffins, will be available throughout the day. Other items on the menu are quinoa edamame mandarin salad, a kale and Brussels sprouts salad with mixed veggies, classic grilled cheese on stoneground multi-grain bread, and an apple & brie croissant with honey.
The first McCafe outlet is located at Union Station, the most important rail station in Ontario's capital city. A second location is reportedly scheduled for an early 2016 opening at First Canadian Place in Toronto's financial district. The new cafes, much smaller than the McDonald's restaurants, will be located principally in the cities. To attract the millennials, the restaurants will offer self-ordering kiosks, mobile device charging stations and free Wi-Fi. The McCafe will also offer “on-the-go" menus to reduce waiting time for guests.
The McCafe brand was formally launched in Canada in 2011, and since then McDonald's has increased its market share significantly in the country. Currently it is one of the strongest markets for McDonald's and is posing stiff competition to Restaurant Brands International Inc.’s QSR Tim Hortons and Starbucks Corporation SBUX in the coffee segment.
The launch of the standalone McCafe is part of the restaurateur’s aggressive strategy to transform itself in an era of changing consumer tastes, and make the brand more relevant to the millennials. With the shift in consumer tastes to healthier products, McDonald’s is seeking to move away from its traditional favorites like burger and fries to kale and salads. Growing its coffee business would also help McDonald’s to boost its breakfast sales, which currently accounts for a large chunk of its revenues.
McDonald's currently carries a Zacks Rank #1 (Strong Buy). Other stocks in the same sector that can be considered is BJ's Restaurants, Inc. BJRI sporting the same Zacks Rank as McDonald’s.
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