McDonald's: Specialty coffee a tall order Fast-food giant hopes risky product launch will wake up dozing sales
Tribune reporter
February 24, 2008
"We are in lunch," Nick Karavites declares at 10:30 a.m. as workers at one of his family's Chicago McDonald's outlets scurry to make the daily transition from breakfast. It happens fast, with machinelike efficiency. Eggs give way to beef patties, which after 38 seconds on the grill are on their way to becoming Big Macs.
Oak Brook-based McDonald's Corp. is facing its own crucial transition. At the end of one of the most successful five-year streaks in its history, with the specter of a sales-sapping recession looming, the burger giant is trying to give itself a second identity: coffee giant.
Adding fancy coffees and other specialty drinks is a bold move intended to make McDonald's a beverage destination and a rival to
Starbucks and other coffee chains. It's a key strategy aimed at luring more customers for snacks between meals. It also is one of McDonald's riskiest product launches ever.
Franchisees such as Karavites must invest tens of thousands of dollars in their restaurants to add a special beverage section to the kitchen, and managers and counter help will have to get used to a new vocabulary—"Do you want a caramel cappuccino with that?"—along with a new, more complex rhythm during the breakfast and lunch rushes.
It's a tall order and comes at a time when McDonald's has shown a hint of weakness. The company's same-store U.S. sales didn't grow in December for the first time in five years, and McDonald's chief executive recently noted that a sputtering economy could put a damper on sales growth.
The franchisee system is squarely behind the coffee rollout, but some worry about the financial commitment as they fret about rising food and labor costs. The coffee initiative "could not have come at a worse time for most operators," one franchisee told a McDonald's surveyor.
But the time had to come.
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