McDonalds Product Introduction: Alcoholic

Beverages

Prepared by Saga Analytics: Jake Decicco, Nicholas Gatto, Ryun Holder, Michael Lederhouse
April 2015

Executive Summary
Mcdonalds is struggling with decreasing sales and customer loyalty, introducing alcohol to the menu
is a method that could enhance customer experience and help the company overcome these
challenges. However, this introduction may pose a threat to McDonalds brand image and the family
dining experience. The key to a successful introduction is to first undergo a test market while
implementing the customer-preferred pricing, placement, and product specifications. If implemented
correctly, with the customer in mind; this test-market introduction may lead to a national roll-out and
result in an improvement in McDonalds sales and customer experience.

Contents

Background
Research Objectives
Design and Methodology
Detailed Results and Conclusions:
Insights from Focus Group and
Survey
Managerial Implications and
Recommendations
Appendix

Slide 4
Slides 5-9
Slides 10-13
Slides 14-27
Slides 28-32
Slides 33-51

Background Information
After experiencing its greatest decline in quarterly profits in the last seven years
(30%) and a decline in global sales growth of 3.3%, McDonalds is at a
strategic crossroads. Something must be done to stop constantly falling
revenues and a lack of customer loyalty while simultaneously converting
potential customers who are opting to spend their dollars at popular, fast-casual
restaurants like Chipotle and Panera. Competitors in the QSR sector such as
Sonic and Burger King have begun to offer alcoholic beverages on their menus
in the hopes to solve similar problems with declining sales and customer
loyalty. This research explores and analyzes the idea of introducing alcoholic
products to McDonalds menu.

Research Objectives

Management Decision Problem

American consumers are increasingly demanding an actual dining experience and not just a
rapid, meal on the go. McDonalds has not been effectively satisfying this demand and this has
led to major losses in sales, profits, customer loyalty, and brand reputation as customers flock to
fast casual offerings like Chipotle and Panera that provide these experiences.

Core Management Decision Problem:

Determine how to create an attractive dining experience for the consumer

Marketing Decision Problem

The key marketing decision problem is: Should McDonalds introduce alcoholic beverages to
their menus?

In order to answer this main, marketing decision problem, we must also answer:
1. Should McDonalds introduce alcohol to their menu?

2. If Mcdonalds should introduce alcohol to their menu, what type and brands should they
offer?
3. What will we price this product at?

4. Where will we sell this product: Traditional McDonalds Restaurants, McCafes, Specialized
McDonalds Bars?
7

Marketing Research Objectives

In reference to MDP #1
1.1: Explore the proposition of serving alcoholic beverages at McDonalds restaurants in the USA.
1.2: Explore perceptions of alcoholic beverages on consumers dining experience
1.3: Explore the effect on McDonalds brand image of selling alcohol
1.4: Evaluate changes in visiting behavior as the result of selling alcohol

In reference to MDP #2
2.1: Generate options of alcoholic beverages that McDonalds consumers would purchase
2.2: Select menu of alcoholic beverages based on survey results

Marketing Research Objectives

In reference to MDP #3
3.1: Measure consumers willingness to pay for specific alcoholic beverage
In reference to MDP #4
4.1: Explore customers preferences for alcoholic consumption in McDonalds (locations, airports, bar,
seating, can vs. draught vs. bottle etc)

4.2: Select test locations for introduction of alcoholic menu

Research Design and Methodology

10

Method and Sampling: Focus Group

Sampling
o

We utilized a judgement sampling technique when choosing respondents for our focus
group. The focus group consisted of four males, ages nineteen to twenty-one. A
homogenous group of college-age males was chosen because McDonalds has lost
millennials of this sort to competing quick-serve restaurants, like Chipotle.

Focus Group Method

o

Michael Lederhouse served as a moderator, following the discussion guide in Appendix 1

The session was held in a quiet, casual setting with the goal of brainstorming current

millennial males perceptions regarding McDonalds and the proposition of adding alcoholic
beverages to the restaurants menu.
11

Method and Sampling: Survey

Sampling
o Convenience sampling was used to select family and friends for participating in the study
o 89 complete responses were used in analysis out of 115 surveys
o Respondents under the age of 21 were screened out of questions regarding alcohol
consumption but still responded to general questions regarding their perceptions and
evaluations of the McDonalds dining experience
Survey Method
o Online survey was chosen as the data collection method
Tabulation
o Data from questionnaires was transferred into SPSS, with which data tabulation and
statistical analyses were processed

12

Composition of the Survey Sample

Demographic Characteristics of the Sample

o The majority of respondents were between the ages of 15-20
o Males comprised 69.57% of the sample
o Most respondents were from suburban areas

13

Detailed Results and Conclusions:

Focus Group and Survey Insights

14

McDonalds is facing an overall negative perception of

its brand and offerings by the consumer

By learning about the customer attitudes to the current McDonalds offerings, one can begin to
understand necessary changes for the consumer:

Focus group participants possessed an overall negative view of the McDonalds brand and
offerings. When utilizing word association techniques with the McDonalds name,
participants generally offered up negative statements like greasy, fake, processed.

Discussion proved that just being a fast and inexpensive offering is not enough,
McDonalds needs to improve the quality of their food.
MRO 1.2, MDP 1

15

Customers have a negative perception of the

McDonalds Dining experience

Focus group participants had an overall negative view of McDonalds dining environment and
ambience, citing cheap furniture and poor lighting. Most were unaware of McDonalds recently
revamped interiors. .

Focus group participants prefer to do drive-thru, instead of dining in.

MRO 1.2, MDP 1

16

The McDonalds dining experience is dependent on the

location of the restaurant

Focus group members from urban areas viewed the restaurant as an establishment filled with
homeless people and drunks, while focus group members from more suburban locations viewed
it as just a normal quick service restaurant.

MRO 1.2, MDP 1

17

Alcoholic Beverages create a dining experience

An alcoholic beverage transforms a dinner into a dining experience. Focus group participants
order a drink to relax, drinking an alcoholic beverage makes the meal more of an experience.

Alcohol is a paired-product, certain beverages go with certain food items and actually enhance
each other.

MRO 1.2, 1.3, 1.4 and MDP 1

18

Customers Willingness to Pay is dependent on many

factors

Focus group participants willingness to pay for alcoholic beverages depends on the type of
beverage, quality of beverage, the restaurant, and the environment of the meal. Focus group
participants were much more willing to pay higher prices for a beer at a bar or upscale
restaurant, then compared to a QSR or fast casual restaurant.

MRO 3.1, MDP 3

19

The average consumer is willing to pay $3.14 for a

drink at McDonalds

Respondents willingness to pay ranged from a minimum of $.99 to a maximum of $10

On average, consumers are willing to pay $3.14 for a standard drink at McDonalds, with a
median of $2.99

MRO 3.1

20

Alcohol will alter the environment, dining experience,

and clientele of McDonalds

Some of the focus group participants viewed McDonalds as a family restaurant and believed
that serving alcohol would contradict this image. At the same time, many participants said that
they would feel uncomfortable drinking in front of families, while some feared that offering
alcohol could attract a transient clientele.

Focus group participants were attracted to McDonalds offering alcohol but would not go out of

their way just to have it. Many would have to be passing by a McDonalds and be hungry/thirsty
to actually go in.

We explored this insight further in the survey and found consistent results (See next page)
MROs 1.1-1.4, MDP 1

21

Many respondents believe that alcohol will negatively

impact the McDonalds experience and image

Surveyed respondents would be unlikely to purchase an alcoholic beverage at McDonalds

because:
o Alcohol isnt a good fit for McDonalds food, atmosphere, environment
o It would be awkward, inappropriate in a family setting
o Consumption at McDonalds would be have a negative social stigma
o See Appendix 3 for full list of responses

RO1.2, 1.3

22

Respondents preferred Beer as McDonalds alcoholic

beverage

Beer was unanimously mentioned first as the go to beverage for McDonalds. The participants
had little issue reconciling beer with the McDonalds menu because, burgers and beer go
together. Beers are considered a casual alcoholic beverage which would be more socially
acceptable to drink at a place like McDonalds than a cocktail or hard liquors.

Cost of beer must follow McDonalds value menu pricing style. Respondents suggested that

the quality of beer needs to be correlated to the quality of McDonalds food. Suggestions of
beers like Pabst Blue Ribbon and Bud Light came from focus group participants.
MROs 2.1, 2.2, 4.1, MDP 2, 4

23

Coors Light is the preferred beverage of respondents

Consumers are most likely to purchase Coors Light with 46.23% of respondents stating that they are
likely to purchase this beverage (See Appendix 4.2)
Mean rating (1-5) on likelihood of purchase:
Coors and Budweiser highest with a 3.278.

RO 2.2

24

Setting is very important for alcohol consumption at

McDonalds

Focus group participants think that it is important to separate those consuming alcohol at
McDonalds from those who are not. By creating an alcove, separate room, or patio, McDonalds
would be able to preserve the family dining experience and create a unique experience for those
of age.

Introduction alcoholic beverages on McDonalds menu will create many regulatory issues, such

as ID enforcement.

MRO 4.1-4.2, MDP 4

25

Consumers want their drinks served in a designated

area in a bottle

48.65% of respondents would prefer to consumer their alcoholic beverages at a bar in

McDonalds

43.24% of respondents would prefer to drink their beverage out of a bottle

Preferred Drinking Area
Preferred Drinking Vessel

RO 4.1

26

Introducing alcohol to the menu has a unknown impact

on visiting behavior, but not overwhelmingly negative

56.52% of respondents are undecided

about a change in their visiting behavior
due to the addition of alcohol to
McDonalds menu

Respondents who havent visited

McDonalds in the past month are more
undecided regarding a change in their
visiting behavior due to the addition of
alcohol to McDonalds menu (See
Appendix 4.1)

RO 1.4

27

Managerial Implications and

Recommendations

28

Test Market

Although data analysis from the survey indicates an undecided yet non-negative effect on
customer visitation with the introduction of alcohol, insights from the focus group reveal that this
product introduction may negatively affect McDonalds brand image and the overall customer
experience. It is imperative that McDonalds does not underestimate the effects of social
influence and criticism on this product introduction and as a result, it is recommended that
McDonalds begins this roll-out in a test market. This test-market must be highly-contained but
also representative of McDonalds customer base. Introducing alcoholic beverages to the
McDonalds menu in a contained test-market will allow the company to further observe the effect
that this introduction has on the McDonalds experience and brand image and aid in a decision
regarding a national roll-out.
The following recommendations should be implemented in this test market (See following pages)

29

Serve Coors Light in a bottle

Data contains information to support the introduction of Coors Light as the primary alcoholic
beverage on McDonalds menu
We found that serving beer in a glass bottle was highest rated by respondents. Thus, it is
recommended to serve these beverages in bottles.

30

Price the beer under $3

Analysis found that the average consumer was willing to pay $3.14 for a bottle of beer, with a
median of $2.99. Thus, it is recommended that McDonalds prices a bottle of Coors Light at
$2.99.

31

Serve Alcoholic Beverages in a

designated, private area

We found that customers would prefer to consume alcohol in a designated area, either at a bar
or table. As a result, it is recommended that McDonalds creates a private area for drinking at
their test market location complete with a bar and tables. Current QSR competitors have created
outdoor patios and lounges for customers who are drinking alcohol and this designated area
would aid McDonalds in separating the experience of of-age customers and families, while
facilitating the regulation and monitoring necessary to serve alcohol at a restaurant. In short,
data supports that this designated area would improve and preserve the dining experience of all
McDonalds customers.

32

Technical Appendix

33

Technical Appendix Contents

1. McDonalds Product Introduction-Alcoholic Beverages Survey: Slides 35-45
2. Word Map of Why would you be unlikely to purchase an alcoholic beverage at McDonalds?: Slide 46
3. Full response list for Why would you be unlikely to purchase an alcoholic beverage at McDonalds?:
Slides 47-48
4. Inferential Testing and Analysis: Slides 49-51

34

Appendix 1: McDonalds Product IntroductionAlcoholic Beverages Survey

Q1 The purpose of the following questionnaire is to collect your general insights on McDonalds and the potential introduction of
alcohol to McDonald s menu. Please answer openly and thoughtfully. On behalf of McDonalds, we would like to thank you for
your time and truly appreciate your insights!
Q3 What type of area do you live in?
Rural (1)
Urban (2)
Suburban (3)
Other (4) ____________________
Q5 Have you been to McDonald's in the past month?
Yes (1)
No (2)

35

Question 6: How satisfied were you on the following

elements during your last visit?
Very
Dissatisfied
(1)

Dissatisfied
(2)

Somewhat
Dissatisfied
(3)

Neutral (4)

Somewhat
Satisfied (5)

Satisfied (6)

Very
Satisfied (7)

Food Quality
(1)

Price (2)

Service (3)

Dining
Experience
(4)

Restaurant
Atmosphere
(5)

36

Appendix 1: McDonalds Product IntroductionAlcoholic Beverages Survey

Answer If Have you been to McDonald's in the past month? No Is Selected
Q7 Have you ever been to McDonald's?
Yes (1)
No (2)
If No Is Selected, Then Skip To Do you ever drink alcohol at restaurants

37

Q8 How would you evaluate the following aspects of

McDonald's restaurants?
Very Poor (1)

Poor (2)

Fair (3)

Good (4)

Very Good (5)

Food Quality
(1)
Price (2)
Service (3)
Dining
Experience
(4)
Restaurant
Atmosphere
(5)
38

Appendix 1: McDonalds Product Introduction-Alcoholic

Beverages Survey
Q9 How do you typically eat McDonald's?
Drive-thru (1)
Dine-in (2)
Take-out (3)
Q4 What age bracket do you fall into?
14 and under (1)
15-20 (2)
21-26 (3)
27-32 (4)
33-38 (5)
39-44 (6)
45 and over (7)
If 14 and under Is Selected, Then Skip To Thank you for your responses! We val...If 15-20 Is Selected, Then Skip to Final
Question

39

Appendix 1: McDonalds Product Introduction-Alcoholic

Beverages Survey
Q10 Do you ever drink alcohol at restaurants?
m Yes (1)
m No (2)

Answer If Do you ever drink alcohol at restaurants?  Yes Is Selected

Q11 At what type of restaurants do you drink alcohol? (Select all that apply)
q Fast-Food (Burger King, Sonic etc) (1)
q Fast-Casual (Chipotle, Panera etc) (2)
q Bar/Pub (The Tomb's, Martin's Tavern etc) (3)
q Family Restaurants (Cracker Barrel, Applebee's etc) (4)
q Upscale Restaurants (Morton's, Daily Grill etc) (5)

40

Appendix 1: McDonalds Product Introduction-Alcoholic

Beverages Survey
Q12 Which drink would you prefer to have with a McDonald's meal?
Water (1)
Soft Drinks (2)
Beer (3)
Wine (4)
None of the Above (5) ____________________
Q13 How would the introduction of alcohol to McDonald's menu change your likelihood of visiting?
Less Likely (1)
Undecided (2)
More Likely (3)

41

Appendix 1: McDonalds Product IntroductionAlcoholic Beverages Survey

Q14 How likely would you be to purchase an alcoholic beverage at McDonald's?
Very Unlikely (1)
Unlikely (2)
Somewhat Unlikely (3)
Somewhat Likely (4)
Likely (5)
Very Likely (6)
If Unlikely Is Selected, Then Skip To Why would you be unlikely to purchase...If Very Unlikely Is Selected, Then Skip To
Why would you be unlikely to purchase..
Q15 How much would you be willing to pay for a beer at McDonald's?
______ In Dollars (1)

42

Q16 How likely would you be to purchase the following

brands of beer at McDonald's?
Very
Unlikely (1)

Unlikely (2)

Neutral (3)

Likely (4)

Very Likely
(5)

Miller (1)
Budweiser
(2)

Pabst Blue
Ribbon (3)
Coors (4)

Natural Light
(5)

43

Appendix 1: McDonalds Product IntroductionAlcoholic Beverages Survey

Q17 Where do you think McDonald's should offer alcoholic beverages? (All that apply)
Bar (1)
Table (2)
Outside Patio (3)
Designated area (4)
I don't drink alcohol (5)
Q18 How would you prefer to drink an alcoholic beverage at McDonald's? (All that apply)
Can (1)
Bottle (2)
Plastic Cup (3)
Glass (4)
I don't drink alcohol (5)

44

Appendix 1: McDonalds Product IntroductionAlcoholic Beverages Survey

Q19 Why would you be unlikely to purchase an alcoholic beverage at McDonald's?

Q2 What is your gender?

Male (1)
Female (2)
Q20 Thank you for your responses! We value your input!

45

Appendix 2: Word Map of Q19

46

Appendix 3: Responses to Q19

because I don't drink
I don't want it when I eat that food and I feel it is a family place with children that should not sell alcohol
drive thru
I usually eat take out from MCD in my car. Adding alcohol not a wise idea.
I go to McDonald's because they sell hamburgers for very cheap, which I believe is McDonald's greatest strength. My typical meal costs $2.20
(2 quarter pounders). One alcoholic beverage would most likely cost more than double that amount.
I don't associate McDonald's as a fun place to hang out with friends and drink alcohol
It's not the place for it.
I don't spend money on alcohol very much.
Doesn't fit the type of meal id be eating
because i would never go to mcdonalds in the first place
If it is more expensive than the alternative option of purchasing beer. Or if it feels awkward among families.
I've always associated with beer in a sit down setting, where I can enjoy it slowly. I would feel rushed in a fast food chain.
Only if I didn't want to drink alcohol at that moment. Unrelated to whether it was at McDonald's or not
Do not stay long enough at fast food restaurant to enjoy a drink
Just doesn't really appeal to me
I would be likely to purchase; maybe I completed the survey incorrectly. Having alcoholic beverages there will not change my propensity to
visit/purchase at McDonald's
I usually eat at McDonalds as a quick, lunch option, where I generally don't want alcohol.
Because I have self-respect, so I don't go to McDonald's.
Type of atmosphere

47

Appendix 3: Responses to Q19

Don't feel it is an appropriate venue
Has a negative social stigma, kind of awkward in front of families
Because I would feel weird drinking in an environment like that. WIth so many children.
Price
Unlikely to purchase alcoholic beverage because its unlikely I will visit a McDonald's
Because when I buy McDonalds, I normally am driving.
I would rather have an alcoholic beverage with a higher quality meal as opposed to a fast food chain burger
I don't drink
Drive thru is primary reason, no drinking and driving
I'm not going there to drink, just get a quick bite through the drive through
Doesn't mixdont go there very often
I am opposed to purchasing anything from MacDonald's because I do not want to support their business.
People drink outside of their house for the sociable atmosphere. The only people who go to mac d's for the
atmosphere are those who are too young to drink alcohol.
I visit for quick food and not a dining experience

48

Appendix 4.1: Inferential Testing, Effect of Alcoholic

beverages on visiting behavior
This test was to determine whether or not there was a
significant difference in the distribution of responses.
H0: The responses are normally distributed across the three
levels
H1: The responses are not normally distributed across the
three levels

Results:
With a test statistic of
16.78 and a p-value of
0.000 there is evidence to
reject the null hypothesis
at the 5% significance
level.
This implies that there was
a significant difference in
the distribution of
responses.
49

Appendix 4.2: Chi-Square Analysis, Beer Preferences

The purpose of this test was to determine whether or not the observed
differences in the distribution of responses of people likely to purchase
the different brands of beer. Initial analysis hinted that Coors was the
brand with the most positive responses; however, this test was to
determine whether or not there was a statistically significant distribution
H0: The responses are normally distributed across the four
in responses.
brands
H1: The responses are not normally distributed across the four
brands

Results:
With a test statistic of
10.29 and a p-value of
0.016 there is evidence to
reject the null hypothesis at
the 5% level.
This reinforces prior
findings that Coors
received mostly positive
responses; the result of the
test implies that there were
differences in the
distribution of responses.
50

Appendix 4.3: ANOVA Testing, Willingness to Pay

across Regions
ANOVA testing is used to determine whether or not the means of the dependent
variable are equal across the different levels of the test factor. In this case the
dependent variable was the Willingness to pay in dollars and the factor is the
Results:
Location of respondents.
H0: The means of the Willingness to pay are equal between different
Locations
H1: The means of Willingness to pay are not equal between Locations

With a p-factor of 0.089

there is no evidence to
reject the null hypothesis.
The means of the
Willingness to pay are
relatively equal across
locales.

51