Mc Donalds and Coffee Game Theory By Tenisha

Mc. Donald’s and Coffee – Game Theory? By Tenisha Mercer / The Detroit News http: //www. detnews. com/2005/business/0504/03/B 01 -137198. htm

Mc. Donald’s is Competing • To burnish its burger-joint image, Mc. Donald's has added healthier items to its menu and remodeled stores with plush seats and flatscreen TVs. • Now, it's perking up the coffee. Metro Detroiters will get the first sip of a new Mc. Donald's coffee Monday when it rolls out the product in Michigan -- the first test market in the nation.

Premium Coffee! • The premium roast blend makes its debut at 525 stores in the state, while the coffee will be launched nationwide later this year. • "Customers wanted something stronger, richer, bolder, " said John Betts, vice president and general manager of Mc. Donald's restaurants in Michigan. "It's really about taking a core product - coffee -- and making it meet the changing needs of the consumer. “

The Product • The new cup of Joe is the latest effort by the world's largest restaurant company to reinvent itself. • The Oak Brook, Ill-based chain has successfully revived slumping sales, but increasingly competes with chains like Starbucks, Panera Bread Co. and others. • The chain will give away coffee samples and coupons to fans at the Detroit Tigers' opening game at Comerica Park on Monday. A mobile coffee van stationed near Comerica Park will also distribute free samples. • The chain is hoping the premium blend will have the same success as its popular Mc. Muffin sandwiches. • The new coffee will replace the chain's house blend. It will cost $1 -$1. 30 -- far cheaper than a Chi coffeehouse brew.

The Economics – Game Theory? Mc. D – Coffee? • What do the payoffs look like? • Do we know for sure? • Do they know for sure? • What determines profits here? No Mc. D No $ Egg Mc. S S Mc. D Yes S Yes Mc. D S