Is the country ready for premium smoothies from the dollar menu discounters at McDonald's (NYSE: MCD)?
The world's largest restaurant chain will launch a national marketing campaign for its new frozen fruit beverages tomorrow. There's plenty riding on the official introduction of its Wild Berry and Strawberry Banana offerings, hot on the heels of the chain's McCafe rollout.
The chain's barbell pricing approach works only if it has high-priced products to offset the folks going in for the marked-down grub such as on its Dollar Menu. The smoothies are selling briskly at $2.79 at the Miami-based locations where I've been able to score some slurps ahead of the official rollout. In Dollar Menu terms, that's nearly three McDouble or McChicken sandwiches.
It's perfect timing for McDonald's. Summer is prime smoothie-selling season for niche leader Jamba's (Nasdaq: JMBA) Jamba Juice chain. Jamba has historically performed better during the summer season before moving on to losses as icy chills chase away the thirsty.
McDonald's obviously isn't the only fast food chain hoping that chilled upsell items will help bump tabs higher. Yum Brands (NYSE: YUM) has been marketing its Frutista Freeze slushees for a couple of years.
Smoothies have also been the go-to solution for the java junkie outlets. Starbucks (Nasdaq: SBUX) introduced its Vivanno line of smoothies two years ago, around the same time that Caribou Coffee (Nasdaq: CBOU) introduced its blueberry and acai smoothies.
Quantity doesn't mean quality, of course. Spoiled by Jamba's and Smoothie King's hand-cranked creations, my taste buds were insulted by Vivanno. I was prepared for the worst with the McCafe smoothies, since despite the "fresh fruit" claims the smoothie mixes are machine-dispensed before the McBarista blends it all with ice and yogurt.
I was pleasantly surprised. It's no Jamba. There aren't dozens of flavor variations. There are no vitamin, protein, or antioxidant boosts to enhance the healthy nutritional value. However, the taste falls only marginally short, unlike Vivanno's smoothie on training wheels.
This will be big for McDonald's, especially since it routinely caters to children who don't need the caffeinated java boost, but now have a healthier option than so-so milkshakes or low-priced soft drinks to add to their meals. Unlike the slushee-based beverages that Burger King (NYSE: BKC) and Sonic (Nasdaq: SONC) have been offering for years, McDonald's now has a line of fruity premium beverages with respectable nutritional tables.
Well played, Ronald McDonald.
Have you tried the McCafe smoothies? Share your thoughts in the comment box below.
