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Sunday, December 09, 2007 

McDonald's really wants to compete with Starbucks?

And it's going to cost....bigtime.
McDonald’s Corp. will help franchisees pay the $1 billion-plus cost of its bid to compete with Starbucks across the country next year.

The company told franchisees this week that it will pay up to 40% of the costs to remodel restaurants to accommodate the machines needed to make lattes, mocha drinks and other specialty beverages. McDonald’s USA President Don Thompson said last month said the remodeling could cost as much as $75,000 for each of the 13,800 U.S. restaurants.

The price McDonald’s pays per restaurant will vary depending on the amount of remodeling needed, but if the company pays $30,000 a restaurant, the total would exceed $400 million. In addition to the cost of remodeling, franchisees would have to pay about $25,000 per restaurant for the new beverage equipment. - Chicagobusiness

$400 million. That's a lot of $1 burgers they'll have to flip. Why don't they concentrate on greening up their business, putting their weight behind better food safety regulation, etc. instead of branching off into a realm they are sure to lose.

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have you ever had a MCD coffe?

If they had done this before there were two Starbucks in my area of nothingness on the Gulf Coast, they might have had a prayer, but but making expresso, et al. is a little more complicated than flipping burgers, so they are into training probelms/expenses and labor costs, not just remodeling.

Using tortillas doesn't make you a Mexican restaurant, and making expresso doesn't make you Starbucks. They need to spend a little more on their core competencies and forget about expanding into areas where they have no credibility and there may be no demand.

I just don't get it. Why do they even want to try to compete here?
I agree with you... there are a ton of areas they should focus on...lattes isn't one of them.

Not only does McDonald's market to people who want fast, convenient food, they also market to people who want inexpensive food (those with a very limited amount of money).
Sounds like a good way to sell a $2.00 "gourmet coffee"—along with a two for a dollar burgers—to people who would never spend the money at Starbucks.
Next up: "Mickey D's Payday Advance Loans"

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