McD Juices Up Smoothie Category

CHICAGO—Besides the coffee wars, maestro marketer McDonald’s is now igniting a nationwide smoothie war. It launched a nationwide rollout of $2.29 wild berry and strawberry banana smoothies with real fruit, yogurt and ice.The market is abuzz that McDonald’s 14,000 restaurants located in communities throughout the country are sending a jolt out to the sleepy U.S. smoothie sector.

McDonald's franchise in rural Kentucky town, where Smoothie shops don't exist

"We are thrilled to expand the McCafe product line with the introduction of McCafe real fruit smoothies," said Neal Ruby, president of the McDonald's Operators' Association of Southern California (MOASC). "We believe McCafe real fruit smoothies will not only add a new dynamic to the McCafe menu, but will also help solidify McDonald's as the number one destination for beverages."

Food industry analyst Dennis Lombardi of WD Partners told Marketwatch (audio), “They have a great advantage in the fact that they have drive-throughs, and a lot of specialized smoothie companies do not.” Lombardi thinks it is hard to predict if McDonald’s will one day be king of the smoothie hill when it comes to sales. “I think it's going to continue to segment the smoothie customer from the premium customer who really wants to watch the fresh fruit going into the blender, to the customer who really wants convenience and doesn’t mind it coming from a dispensing machine.”

photo courtesy of McDonald's Corp

Some think that the fast-food giant’s entry into their turf could be a good thing—like Jamba Juice, a chain of 750 franchised and company-owned smoothie stops. "We view the entry of McDonald's into the smoothie category as an overall validation of the potential of smoothies," Jamba Juice chairman and CEO James D. White told the Wall Street Journal ($$$). "Their advertising will expand interest in the category."

The Journal reports that at least some franchisees are quite happy with McDonald’s move. Franchisee Deborah Virgiles, an owner-operator of two McDonald's that have been testing smoothies for three years in Detroit, said that the drinks have sold well. She will hire two additional beverage specialists per shift, up from two currently, "largely because of demand of a product that the customers want."