Step Inside

Get ready for china cups in McDonald’s restaurants. This month McDonald’s Corp. opens four McCafé coffee shops inside McDonald’s restaurants in Raleigh, NC, and San Francisco. Three units opened last month as McDonald’s tests the respite-within-a-restaurant concept that’s expanded overseas since its 1993 launch in Australia.

Big Mac hopes to draw moms and mobile professionals with couches, music, wireless Internet access and a menu of gourmet coffee, sandwiches and desserts. If McDonald’s gets its way, McCafé may rival Starbucks eventually: Plans call for 400 units worldwide by yearend, with 80 added overseas this year.

A coffeehouse is “one of the many innovations to make our brand more contemporary and relevant. This has been an important year for us to help reshape how consumers think about our brand,” says McDonald’s director of marketing Richard Yoo. “Moms will access McDonald’s for her kids and McCafé for herself.”

A McDonald’s franchisee tested one McCafé in a Chicago office building from April 2001 to May 2002, but the café was closed when the building went under renovation. Now McCafé has bigger units and a broader menu, which complements additions (such as premium salads) to the flagship menu.

This U.S. test — a mix of company-owned and franchised units — duplicates successful Australian units. “We need to build credibility in the coffeehouse segment,” Yoo says. “Once we get that, we’ll be more approachable and affordable than competitors.”

McDonald’s tapped Frankel, Chicago, to create guidelines that keep all McCafé décor, packaging and marketing consistent worldwide. “As a store-within-a-store, you have to co-exist with the main brand, but also set your own pace,” says Jim Polowy, Frankel VP-group design director. “The idea has to be buttoned up so it’s not open to interpretation all over the world.”

Store-within-a-store also lets McDonald’s leverage existing traffic and long-time equities, extending its reputation as family-friendly and affordable. “The Italian coffeehouse image doesn’t work well for McDonald’s customers. They tell us, ‘You can’t even order small, medium or large,’” Yoo explains. “Plus, not everyone can afford $4 for their cappuccino fix. Consumers expect affordability from McDonald’s.”

McDonald’s builds a distinct brand by gauging consumers’ expectations for “an authentic coffeehouse experience,” Yoo says. “Wood, leather and fabric make a difference in presenting food and the experience.” McDonald’s core personality, dressed in an upscale décor, gives McCafé a distinct but complementary image.

McDonald’s targets moms with direct mail and runs FSIs to tout store openings, then distributes samples and coupons in mom-friendly spots like malls, sports venues and holiday events. Sampling also targets mobile professionals.

Clicks to bricks

Meanwhile, Yahoo established its first retail presence in September with the Yahoo Lounge in Marshall Field’s flagship Chicago store. The lounge is up through February and may stay longer, if successful. Yahoo isn’t talking about other locations now: “We’re just focusing on this one for now,” says Yahoo licensing manager Angela Screbant Crenshaw.

Yahoo Lounge is part of Field’s boutique strategy that brings brands — most of them (but not all) fashion names — and events to its refurbished State Street store. The Target Corp. division is reinventing its veteran department store brand to give it a hip edge. A “vertical fashion show” in September put a catwalk along the edge of the 10-story building, with models lifted on wires to “walk” the stage. GMR Marketing, New Berlin, WI, handled.

Yahoo’s yellow-and-purple lounge lets the brand reach an offline audience it doesn’t typically get. Field’s shoppers can sample Yahoo features via kiosks and multi-media demos. This month it’s kids’ site Yahooligans; Yahoo Personals are up for January and Yahoo Mail for February. (Yahoo has already showcased music site Launch, DSL and Games on Demand.) The lounge also sells Yahoo-branded cameras, Webcams, keyboards and computer glasses.

The Yahoo brand gives Field’s a halo of fun and innovation to draw in a tech-savvy crowd. In exchange, Field’s lends Yahoo traffic — in the store and out. A display window houses one plasma screen showing action in the lounge, and another showing the programming that’s inside. Videos from music site Launch drew crowds on the street. “People were telling each other to get out of the way,” Crenshaw recalls. “It definitely draws people in.” (The window even had a doorbell that yodels “Yahoo!” when pressed.)

Inside, events like a late-November gaming tournament, free Internet access, friendly staffers and comfy chairs draw crowds, too. Yahoo measures traffic, kiosk time and demographics. “The staff is reporting to me every day,” Crenshaw says.

Field’s approached Sunnyvale, CA-based Yahoo in early 2003 to propose a boutique. Yahoo’s in-house design team, IDEA, created a blueprint for décor, furnishings and technology, then worked with Field’s design firm, Shea Design, to make it compatible with Field’s image.

“Field’s was looking for brands that consumers would appreciate and want to be part of,” Crenshaw says. “This is a great way to bring a brand like ours to life in an offline environment.” Yahoo and Field’s share the cost of the lounge.

Field’s has recruited 500 brands to fuel its revamp with boutiques like the Coca-Cola Bar, the Bally’s Crunch Bar, Reflect cosmetics (extending Procter & Gamble’s online brand, Reflect.com), Levenger’s and Creative Kidstuff and stationer Papyrus. Scooter maker Aprilia USA opened its first U.S. boutique-in-a-store there in October. Field’s will test boutique ideas at State Street and extend successful ones to its 62 stores.