McDonald’s Sorry It Lied, and Sorry Its Aussie Coffee Stinks

by Cynthia Wilson | June 2, 2011 10:02 am

McDonald’s (NYSE: MCD[1]) is sorry. It’s sorry it lied, and it’s sorry its coffee doesn’t taste better.

That’s the kind of admission no restaurant likes to make, but McDonalds Corp. has launched a multi-million dollar advertising campaign in Australia to apologize[2] for its claims that McCafe’ coffee is best loved there.

In addition to asking customers to let the company know if the quality of its coffee continues to disappoint, the world’s largest burger chain said it will appoint baristas at its more than 650 restaurants in Australia to provide expertly frothed milk for its coffee and take customer feedback.

McDonalds told The Australian[3] that the apology is unprecedented for the maker of the Big Mac, inspiring the company to run ads on television, radio, in newspapers and social media to admit that many Australians just don’t like its McCafe. But McDonalds believed it had little choice but to offer an apology after its claims[4] that McDonalds McCafe’ was preferred in taste tests over another leading brand there.  McDonalds never mentioned the rival coffee, though it was presumed by many to be Starbucks Corp. (NASDAQ: SBUX[5])

“Australians have a very sophisticated coffee palate and we were not delivering a strong enough cup of coffee,” said Helen Nash, McDonalds’ chief operating officer in Australia.

Why so much fuss?  Coffee sales accounted for more than 10% of McDonalds’ $1.46 billion in sales last year in Australia.  In the U.S., McDonald’s coffee sales equal about 6% of its sales.

The apology is should be a little embarrassing for McDonalds considering that the McCafe’ concept was originated in Australia nearly a decade ago.  However, McDonalds is not the first restaurant chain to apologize for its misleading advertising. Last year, Domino’s Pizza (NYSE: DPZ[6]) ran TV spots admitting that its crust tasted no better than cardboard and promised change.  The resulting recipe and sauces that followed helped Domino’s Pizza record an initial 14.3% quarter to quarter increase in same-store-sales.

McDonalds should be so lucky.

As of this writing, Cynthia Wilson did not own a position in any of the stocks here.

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