John Betts started flipping burgers as a freshman at Long Island University in New York. Now, 38 years later, he’s moved from the grill to the helm of McDonald’s Restaurants of Canada Ltd. “I started as a part-time crew person,” Betts said Monday during an interview from Toronto. “When I graduated from college I worked my way up and I’ve had the chance to work around the world,” he said. “I love it as much today as I did back then.” With Betts leading the way, the world’s No. 1 hamburger chain is rolling out one of its biggest new product events ever in a bid to put the heat on Tim Hortons Roll Up the Rim fans. For the next two weeks, McDonald’s locations across Canada are giving away coffee – no purchase necessary – whenever breakfast is served. “We know that Canadians are serious about their coffee,” Betts said, adding that the premium roasted coffee is made with 100 per cent arabica beans. “It’s really an opportunity for us to treat our customers and Canadians to our great cup of coffee.” The free-coffee campaign is part of the fast-food restaurant’s effort to expand its menu, Betts said. “We started many years ago with 15 cent hamburgers, french fries and milkshakes,” he said. “But today breakfast is a very big part of our business.” McDonald’s Canada sold about 1.3 million more cups of coffee in the first quarter of 2009 compared with the same period last year. “It’s a substantial improvement and shows that we’re hitting the mark with our customers,” he said. The caffeine-fuelled crusade to win over coffee lovers seems to be directed at winning market share from the biggest coffee competitor in Canada. With 2,800 stores across the country, Tim Hortons has twice as many locations as McDonald’s. Charles Cirtwill, executive vice-president of the Atlantic Institute for Market Studies, said free coffee is always appealing, especially during a recession. “McDonald’s didn’t get as big as they are by resting on their laurels,” he said during an interview Monday from Halifax. “All the power to them if it woks out, but I suspect their competitors are going to respond in kind,” he said. “Tim’s isn’t exactly going to give up their market share easily.” While McDonald’s is currently marketing its regular cup of Joe in Canada, the restaurant will soon vie for upscale coffee drinkers – who usually frequent Starbucks or the Second Cup – by offering espresso-based options in Atlantic Canada. “South of the border we’ve been very successful with McCafe,” Betts said, referring to the McDonald coffee bars, which offer beverages such as cappuccino, lattes and mochas. “We are going to take a look at some of the premium coffee offerings in the very near future.” Steve West, a McDonald’s analyst with Stifel Nicolaus, a St. Louis, Mo.-based brokerage and investment banking firm, said in a note to investors earlier this year that McDonald’s is “well under way” toward its goal of being a major player in the specialty coffee business. McDonald’s has the potential to capture cash-strapped consumers who may skip a trip to Starbucks for a cheaper alternative, West said. Although prices vary by market, he said espresso-based drinks at McDonald’s are about 65 cents to a $1 cheaper than at Starbucks. In addition, the restaurant could increase its sales by roughly three to six percent and boost earnings per share by five to nine cents each year once the program is fully rolled out. Betts said that although McDonald’s continues to expand, the company’s primary focus is on meeting customer’s needs by updating and remodeling the existing fast-food restaurants. “We’ve taken the approach that being better, restaurant by restaurant, is more important than being bigger and just building more restaurants,” he said. “The great news is we’re continuing to grow during these challenging times and there are absolutely no cutbacks.” Betts said that as people look to stretch their dollar further, the value that McDonald’s offers is appealing. “As folks tighten up a little bit on their budgets they look for options out there and we continue to offer great products at a great value.”
