"People who want gourmet coffee are not going to Mickey D's. You go there, you want good coffee that's cheap. You don't go there looking for Starbucks or Rockin' Joe (local shop) coffee." That opinion, straight from the mouth of the resident 19-year old looking over his father's shoulder as he worked on this piece, may very well sum up the current dilemma at McDonald's.
The chain has pushed an upscale coffee strategy with plans to have all of the company's 14,000 restaurants selling lattes and cappuccinos by next year. Many of the franchisees of those restaurants, however, are questioning if the strategy makes sense when the chain is finding it more difficult to sell its mainstay fare in the current economic environment.
According to a Wall Street Journal report, McDonald's own numbers suggest that the company's plan to unseat Starbucks (which is doing a pretty good job of unseating itself at the moment) is not going very well. In six major markets where specialty coffee drinks were introduced, sales peaked after about three weeks and then began to fade.
In Kansas City, MO, weekly sales of specialty coffee drinks per restaurant reached 359 by early December. By the last week in June, sales of the drinks had fallen to 217.
A spokesperson for McDonald's, William Whitman, disputed the Journal's findings, claiming that sales in most markets where the chain has introduced specialty coffees are meeting or exceeding the company's expectations.
Proponents of the program point out that McDonald's has not even begun a large national advertising push to promote the drinks. Also, the company tallies iced coffee drinks separately from espresso so what may appear to be sales dropping off may simply be a switch from one beverage to another.
Even with explanations attached, a number of franchisees are balking at making major renovations, notably adding a special beverage counter to sell the specialty coffee line. "Nobody wants to spend the money on that," a franchisee told the Journal.
Some franchisees have opted to only install the machines needed to make the new specialty drinks.
Discussion Questions: Is McDonald's plan to add specialty coffee centers at its U.S. restaurants a good idea being implemented at a bad time, a good idea at the right time or just a bad idea for any time? Do you think the chain needs to modify its plans?