July 8, 2003
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Would you like Internet access with your fries?
By Ina Fried
Dave Vucina, CEO, Wayport McDonald's is convinced that, for many people, the answer is yes. However, even as it expands the number of restaurants offering wireless Internet access, company executives admit they are still trying to figure out the dollars and¢ that will make the move add up.
On Tuesday, the company announced a second trial of Wi-Fi access, announcing it has equipped dozens of restaurants in the San Francisco Bay Area with the gear its customers need in order to surf the Web while wolfing down some Chicken McNuggets. Earlier this year, the company began offering service at 10 restaurants in Manhattan.
But McDonald's is still trying to figure out what to charge patrons who want to use the Internet and how to share that revenue with those that offer the Internet service.
"The most important part is, 'Is this relevant to our customers?'" said Don Thompson, president of McDonald's West Division. "If that's the case, then we'll deal with the revenue sharing."
In San Francisco, McDonald's plans to charge $4.95 for two hours, although the company will offer deals that give people some access if they buy certain meals. Also, those who subscribe to Wayport's network will also be able to surf at McDonald's using their existing service plan. So will those who have roaming rights on Wayport's network, including customers of Verizon Wireless, AT&T Wireless and iPass.
McDonald's plans to have more than 75 Bay Area restaurants ready to serve up the Net in short order, with most up and running in the next few days.
Analysts have questioned the business model behind equipping vast numbers of retail spots with wireless Internet access.
Ultimately, though, McDonald's sees Wi-Fi as a way to sell more meals, not as a way to get into the Internet business.
"What we're banking on is that more customers will visit McDonald's," Thompson said.
The company has experimented with other ways of using technology to reach those hungry for fast food. It tried, but later abandoned, a program that sent text-message promotions to cell phone users in the United Kingdom.
The restaurant is also using its various Wi-Fi trials to audition different service providers. Cometa Networks was the technology company behind its earlier New York trial, while Wayport is offering the service in the Bay Area. The company plans to offer service in Chicago in the coming months as well.
"We're really good at selling hamburgers," said Mark Jamison, senior director of strategy and business development at McDonald's. "We're not good at predicting technology."
The company is ultimately looking for a single company that can outfit its U.S. stores with the necessary gear to provide service, as well as handle things like billing and customer support.
Some have also questioned whether McDonald's has enough of an upscale clientele to make the investment pay off. While McDonald's executives spent time at Tuesday's launch event trying to point out that plenty of professionals go to McDonald's, the real reason the chain got interested in Wi-Fi is that it thinks the masses will bite.
"Everyone assumes this service only appeals to business people that fly in planes," Jamison said. "What if you looked at the cell phone industry that way when it launched?"
The effort is just getting off the ground in the United States, but Jamison said the company is already seeing strong adoption in other areas of the world, such as Japan and Taiwan, where nearly all the McDonald's restaurants offer Internet access. And although today customers need their own laptop or handheld equipped with Wi-Fi, Jamison said the restaurant will soon announce plans that allow those without such devices to get onto the Net inside McDonald's.
Convincing the masses may not happen overnight, though.
A few blocks away, at another McDonald's, Jason Yang walked out of the restaurant without noticing the signs promoting Internet access and without ever taking out the notebook computer that was in his bag.
"I don't use my laptop at restaurants," said Yang, a student at Golden Gate University here.
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