Can I Get That McLatte Supersized?

Steve GDecember 7th, 2007
By: Steve G

In the mood for a McLatte? How about a super-sized McMocha? You may believe that you would never order such a drink, but McDonalds is betting that you will. On the heels of their reported success with its premium gourmet drip coffee and iced coffee, McDonalds has announced that it plans to set its sights on the consumer market that is predominately ruled by Starbucks: specialty coffee. Don Thompson, McDonalds president, stated, We want to move from beverages as an accompaniment to being a beverage destination. It will be interesting to see how things develop, since McDonalds is known best for its Big Mac, Dollar Menu, and ever-annoying Happy Meal.

Many analysts believe that McDonald's can carve a niche for itself in the $12 billion premium coffee industry. However, although corporate is making the push into the specialty coffee market, it's hitting a brick wall from McDonalds greatest strength: franchise owners. The problem is that new foods and ideas come with additional equipment and training to implement. Drinks like cappuccinos and lattes require a large investment into equipment installation, maintenance and user training.

With these new plans starting to take front stage, many franchise owners are balking at the $100,000 cost to implement these drinks into their own stores. Obviously, the franchise owners dont share the same optimism that corporate McDonalds seems to have. In order to address the concerns of the franchisees, McDonalds has said its confident that the new coffee will boost annual revenue by $125,000 for each store. This is a rather bold statement to make, considering that McDonalds has never been known to excel at selling specialty drinks.

McDonalds statement is probably based on the success that other chains have had after introducing specialty coffee. Dunkin Donuts is one such company. After a long trend of declining profits, Dunkin Donuts revitalized business by having their shops serve specialty coffee drinks in 2003. They have proclaimed that much of their renewed success came from tapping the specialty coffee market.

In any case, the introduction of premium coffee to McDonalds menu is a bold move. Lets hope that this decision is more of a hit than some of their other new menu items have been. History shows that McDonalds has had at least a couple of misses already, such as the McPizza and the Mc DLT (Keep the hot side hot! Keep the cool side cool!).

The increasing number of chains entering the premium coffee market bodes ill for the overall quality of coffee. Its understandable that chains are maximizing their profits by integrating gourmet coffee into their menus, but at what cost for quality? The drink you buy at McDonalds may be cheaper, but McDonalds definitely wont offer anywhere near the quality or variety of coffee blends that Starbucks offers. Lets just hope that the chains never run the specialty coffee shops out of business.

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