McDonald's Free Wi-Fi Should Worry Starbucks

Posted by Stephanie Startz on December 16, 2009 05:26 PM

Want Wi-Fi with that?

McDonald’s plans to lift the $2.95 charge currently placed on two hours of wireless Internet as a part of the fast food chain's overall rebranding effort to become a “destination,” where customers hang out instead of dine and dash. McDonald’s will continue its partnership with AT&T.

McDonald’s evolution into becoming a destination began this year with the premier of the McCafe, McDonald’s premium coffee line, in direct competition with Starbucks. The chain plans to expand its drink offerings in mid-2010 to include frappes and smoothies, further enticing consumers into making McDonald’s, not Starbucks, the third place in their lives.

Starbucks currently charges $3.99 for two hours of Internet access and offers members slight discounts based on accrual of points through their rewards program.

McDonald’s has slowly set out to update its stores with modern designs intended to introduce a hip element to the chain and be more inviting to consumers.

But is the appeal of free Wi-Fi worth the stench of a deep fryer? While McDonald’s abundance of chains makes it one of the most prevalent hot spots in the United States, does it carry enough allure to attract the same audience as Starbucks? (Can you imagine a future where fledging screenwriters populate McDonald’s and not Starbucks?)

Yet free is free, and in this economy, price is everything.

More about: Starbucks, Wi-Fi, Wireless, AT&T, McDonald's, Food, Beverages

Karen Swim says:

Great headline! I think that one of the first missteps (and there have been many) that Starbucks made was straying from the importance of the "experience." I would not arrange to meet business clients at McD's or hang out there banging away on my laptop. However, I do see how this will enhance brand loyalty. If I were a McDonald's customer, the free wi-fi would probably make me choose it over other competitors.

December 17, 2009 08:53 AM #

Bill Baker says:

Very, very smart of McDonald's. Now if only $500/night "luxury" hotels would do the same, actually offering a value-added service versus trying to squeeze every last dime out of us. I agree with Karen (above) that I don't think I would conduct a casual business meeting in Mcdonald's just yet, but perhaps if they started working on their inside environment, that might change. They're heading in the right direction, that's for certain.

December 17, 2009 09:03 AM #

Abe Sauer says:

Bill, I cannot agree more. The $12 (or whatever) hotels charge for wifi in their rooms does so much damage to te brand. I remember the hotel name of every brand that screws visitors for this money. It seems such a simple thing to extend such a small free service and as a result have such a huge impact in your consumers' minds.

December 17, 2009 12:10 PM #

Tracy Levitz says:

Many years ago, I heard an architecture professor explain that fast food restaurants were not designed to encourage patrons to linger. Given the atmosphere, I could not imagine getting the full $2.95's worth of access at McDonalds -- but a quick check of my mail, yes. A gold star for Ronald. Starbucks, on the other hand, wouldn't offer the NY Times if they didn't expect you to hang a bit. They should at the very least lower the $3.99 charge and/or consider making it "unlimited" (I couldn't see someone doing more than 2-3 hours anyway, it's an easy concession). Ultimately, they may have to do away with it given all the free wi-fi out there.

December 17, 2009 09:04 AM #

Christine Elbert says:

McDonald's is seeking to move upmarket (better coffee, smoothies, free wifi, and some remodeling) and Starbucks is tiptoeing into moving downmarket (instant coffee launch). Ultimately, though, it is all about the footprint. Customers are going to go where it is convenient. In urban areas, you can find 3-4x the number of Starbucks versus McDonald's, due to Starbuck's aggressive expansion and their ability to fit into smaller spaces. In suburban/rural areas, they are about evenly split, with a slight nod to McDonald's as the population becomes less concentrated. Ultimately I don't see the threat to Starbucks at this time; their target markets are still too different. Now let's talk about Dunkin Donuts....

December 17, 2009 09:50 AM #

Joel LeVan says:

I highly doubt free Wi-Fi at McDonalds will change the mind of a Starbucks customer. The McD's and Starbucks core crowd are two different audiences. (Plus, the McD's coffee isn't a premium coffee no matter how they brand it.) A fast-food chain consumer might think of choosing McDonalds over a Wendy's or BK, but this article doesn't compare apples to apples. Thinking of staying and surfing? Hope people don't mind changing their clothes after hanging out in a McDonalds for 30 minutes. Clothing seems to absorb the scent of McDonald's food... and not in a good way. Yowser!

December 17, 2009 09:51 AM #

...And I didn't even mention the two different experiences.

December 17, 2009 09:54 AM #

Brent D Smith says:

Joel...I couldn't agree more. McDonalds and Starbucks customers are completely different. The socio-economic differences as well as psycho-demographics make this headline sensationalist at best.

December 18, 2009 04:19 AM #

Also, in a world of increasing wifi-enabled mobile devices (smart phones) mcdonald's may be creating a whole new "pop in" market that knows the golden arches has free service and they drop in, get a coffee etc., just to check a few sites/news/email and move on. The old paradigm of sitting in places for long periods doing online work is crumbling as internet access becomes increasingly integrated to devices.

December 17, 2009 12:14 PM #