Case: McDonald’s Pakistan

Executive Summary
Company Profile:
The case study is done on McCafé that whether it should have been opened in Pakistan or
not. We will be discussing the Company profile, The Dilemma, and a brief discussion on
McCafé. McDonalds is the leading global food service retailer with more than 33 thousand
restaurants and serving nearly 68 million people in more than 119 countries every day. The
first McDonald's restaurant was established in Chicago, Illinois, in 1955 and its corporate
headquarters is based in oak Brook, Illinois. The first McDonalds opened in Pakistan was in
Lahore in 1998 and till now it has more than 72 outlets across 24 cities serving millions of
Pakistanis every year with more than 6000 employees all across Pakistan, and is expanding
its outlets every year. The vision of the company is to move with velocity to drive profitable
growth and become an even better McDonalds serving more customers delicious foods each
day around the world. And the mission statement is to make delicious feel good moments
easy for everyone. However the vision and mission statements mentioned in the case study
was somewhat different. McDonalds is a leader in introducing new standards of quality,
service and cleanliness and has led to a general improvement and growth in Pakistan's fast-
food industry. McDonalds Also Focuses on its social responsibilities by playing a key role in
the Special Kids program supporting charitable organizations including Chamman house and
SOS Children's Village. It has also played a key role in keeping the environment safe by
building parks and supporting Walks against Cruelty to Animals. It also contributes towards
active lifestyle by sponsoring swimming competitions and children coaching programs. In
community relief programs it contributed to Presidents Earthquake relief fund as well.
The Dilemma:
The management was faced by a dilemma as two options presented themselves
1) Launching McCafé
2) Focusing on existing brand
History of McCafé:
McCafé was introduced in 1993 in Melbourne Australia. The concept behind the first McCafé
coffeehouse was to create an atmosphere and increase foot traffic at the entrance of
McDonald’s restaurants. This was a huge success, more and more McCafé outlets started
popping up in Australia and New Zealand. It was recorded that McCafé generated 15% more
revenue than a regular McDonalds. Following this success, McCafé was expanded into the
US market in 2001 and all over the globe. Now what was just a small part of the McDonald’s
strategy has over 1300 outlets all over the globe. Not just a cup of coffee, but McCafé offers a
wide range of gourmet style beverages and food like Smoothies, Mocha, Frappuccino, and a
range of bakery and pastry options as well. These are some of the products shown from the
McCafé menu. But… the actual question is… Coffee or Chai? We are traditionally tea
drinking country. We are one of the largest importers of tea in the world currently.
So, will it be successful to open McCafé in Pakistan or not? Looking at the demographics of
Pakistan, we can see that there is excellent opportunity for international brands especially fast
food chains to expand into Pakistan. We are the 5th largest population and growing rapidly;
35% of which resides in the cities. We are also a young population with 50% percent of the
people below 22 years of age. So this is the group that is trendy and goes for branded
products and food chains. McDonalds saw this opportunity and started its first restaurant in
Lahore back in 1998. Its primary audience was the high income groups residing in the
metropolitan cities. Especially the young adults and teenagers that like to grab consistent
quality fries and burgers and spend quality time with each other. McDonalds also focusses on
its children audience where you’d like to offer an element of fun with the food. Just as the
case with the Happy Meal. If you plan on to branch out into the coffee business, you will
have to look at the competitors. The main competing brand in the gourmet coffee niche in
Pakistan is Gloria Jeans. It’s a well-established international business that was created well
before McCafé and has made its grounds in Pakistan since 2007. Gloria Jeans provides a
Premium Coffeehouse experience to its customers where the coffee is being prepared in front
of them by internationally trained baristas. It is currently providing a culture of friendliness,
cleanliness and high customer satisfaction. Now let’s look at what McDonald’s Pakistan
actually did.
SWOT Analysis:

Conclusion:
The case study ends on a confusing note with a cliffhanger about what opinion was actually
finalized in that board meeting. But we saw that the meeting was held in 2012 and McCafé
was not launched until 2019. So it was shelved till then. It was announced on their Facebook
page in 2019 to create a hype about it and then, it was launched on a different model as
compared to its original coffee house model. McDonald’s integrated McCafé into their
existing menu at their selected outlets, targeting their elite customer base since it’s a premium
product for this market. This approach seems to be a compromise between the two opinions
we discussed earlier. Focusing on strengthening McDonald’s as a brand in Pakistan while
introducing McCafé as well. So instead of introducing a new vertical under the brand name,
they diversified the menu of the main brand. Since McCafé belongs to the premium range in
the menu, an MoU was signed between McDonald's and PIA. PIA being the leading airlines
of Pakistan signed this agreement to serve McCafé products onboard in their flights as well as
on their airport lounges across the country. They also introduced McCafé vouchers for their
boarding passes for free coffee from the lounge for the passengers. Across these years their
strategies have also included powering up with organizations like Shell for promoting their
drive-thru model in Pakistan.
In nutshell, McCafé was launched in Pakistan more like a “Grab a Cup of Coffee” on-the-go
model as compared to enjoying a premium gourmet coffee experience fulfilling the intended
purpose of a coffee house.