Lessons in Inevitability: the McEspresso
It was only a matter of time, but McDonald’s has finally jumped with both feet into the coffeehouse fray, announcing that they are planning on retrofitting many of their stores to accommodate espresso machines and beverage equipment. That’s right: you’re going to see McMochas soon. About 18 months ago, McDonald’s introduced their “premium” coffees in select stores, and apparently met with enough success that they are planning on pushing a full line of coffee beverages to stores nationwide.
Interestingly, the major resistance to this idea isn’t coming from specialty coffee drinkers, independent roasteries, or even Starbucks–it’s coming from McDonald’s’ own franchisees.
To add espresso beverages to current stores will require about $100,000 in retrofitting and equipment purchases for each individual store. That’s a lot of coin to drop to sell coffee drinks, and many franchise owners are worried they won’t make their investment back. It’s not an unreasonable fear, as even purveyors of poor mass-market coffee like Starbucks factor a certain ambiance into the price of their lattes. Take away the neutral colors and quiet jazz, add in harried crowds and beeping fry machines, and it’s going to occur to someone much quicker that they just paid $4.00 for a terrible cup of coffee.
One bright side of this is that dedicated specialty coffee drinkers may not feel much impact; McDonald’s ability to truly compete in the specialty coffee market is in doubt even amongst its own people, and it’s much more likely that the only other company who should feel threatened by McDonald’s move is Starbucks. Starbucks is already starting to really feel the backlash of overexpansion, with hiking dairy costs and slimming margins on the beans (thanks to recovery of worldwide coffee prices after a 30-year low). If Micky D’s taking of a few points of market share means a few less Starbucks on my local street corners, I can’t say that hurts my feelings much.
If that happens, which at this point is maybe a 50/50 chance, there’s another upside, in that local shops could get more frontage. McDonald’s wants to become a “beverage destination”, but it will occur inside already-existing stores. Aside from a few “New!” signs in the windows, the topography of your local street corner won’t change much as a result. Now imagine standing on said street corner with a craving for coffee. Knowing what’s available between McDonald’s and the local coffeehouse next door, do you want to stand in line for ten minutes and pay four bucks for something you know you aren’t going to like? In the actual experience, McDonald’s won’t get you your latte faster or cheaper or better-tasting than local competition, and in fact will likely be worse in all areas. Which, in absence of a Starbucks next door, could mean more business for nearby independents.
That’s a scenario hefty on “what ifs”, but the point is that where there was once a time I might have worried about McDonald’s jumping into the coffee business, now I don’t consider it much cause for alarm. After all, it’s not the first bad idea they’ve had.
I saw my first McCafé on the way to Boston last weekend… a stand adjacent to the McDonald’s at one of the highway rest areas. Only one brewed coffee, alongside the fancy machines that I’m skeptical the counter staff had any idea how to use properly.
I do miss the separate Lavazza stand at the Thruway rest area 40 minutes from my parents’ house near NYC; that, too, seems to have been folded into the McDonald’s. They had great coffee, and I didn’t care that McDonald’s owned them.