McDonald's Australian experiment is to look less like McDonald's

Thu Jan 15, 2015 1:30am EST
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By Jane Wardell

SYDNEY (Reuters) - The Corner, a new cafe in Sydney's trendy inner west, looks a lot like its peers - white frontage, rustic wooden seating, potted plants on the counter, quinoa on the menu and servers wearing hemp aprons.

But look a little closer at the black name sign over the door and a visitor will see "McCafe, established 2014" scrawled in small type.

Owner McDonald's Corp's (MCD.N: Quote) is saying little about the unique cafe and a series of other "learning labs" it is opening in Australia. They include a typical McDonald's restaurant on the outskirts of Sydney that, in addition to its usual fare, offers "build your own" burgers and table service.

But market experts say they indicate McDonald's is seriously worried about tough competition from so-called fast-casual chains around the world that offer healthier food choices and more sophisticated service such as private equity-owned Nandos, Shake Shack Inc (SHAK.N: Quote) and local chains Grill'd and Mad Mex. The fast-casual segment is outgrowing the fast-food sector.

"McDonald's globally are going through a transition," said Rohan Miller, a business academic at Sydney University, who produces studies on the fast-food market for commercial groups.

"This is clearly a soft launch being quietly managed and I imagine there'll be some tweaking to the concept as they get more experienced."

McDonald's would only say it had no plans to roll out The Corner nationally, but acknowledged some of the foods and concepts it is trialling may be adopted elsewhere.

"While we don't have plans at this stage to roll out The Corner concept nationally, it will be used to gauge customer feedback to enhance the offering in our McCafé's around the country," Chris Grant, corporate communications manager for McDonald's Australia, said in an email. "Products and concepts that our customers love may be included in other restaurants."   Continued...

People stand at the counter of The Corner cafe in Sydney in this handout picture made available to Reuters on January 13, 2015. REUTERS/McDonald's Corp/Handout via Reuters