Dec 13 2007
Coffee Wars About To Explode…
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McDonald’s Corp.has offered to help franchisees pay the $1 billion-plus cost of its bid to compete with Starbucks across the country next year.
They told franchisees this week, they 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 claim 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.
McDonald’s officials have estimated specialty coffees could boost annual sales by an additional $125,000 per restaurant, or more than $1.7 billion across the chain. The restaurants now average about $2.2 million in annual sales.
McDonald’s executives say the launch of specialty coffees is the biggest expansion of its menu since the company added breakfast three decades ago.
McDonald’s move is a direct attack on Starbucks.
McDonald’s has had success with the premium coffee it began offering last year. McDonald’s officials said in the coming years they want to begin offering smoothies and bottled soft drinks as well.
This will be a war worth watching!
