Chicago, Nov. 19 - McDonald's Corp., after the success of its upgraded drip coffee - which even managed to snag a thumbs-up from testers at Consumer Reports earlier this year - is gearing up for a massive expansion into the world of lattes.
"We want to move from beverages as an accompaniment to being a beverage destination," Don Thompson, president of McDonald's USA, said in a meeting with analysts Tuesday. "Our speed, our convenience, the value that we can afford to customers without quality comprise will make us a formidable player."
Restaurants will offer lattes, mochas, cappuccinos and espressos with a choice of different flavorings and milk. Industry watchers say the drinks cost about 50 cents less than at Starbucks Corp. (SBUX).
However, the world's largest restaurant chain is already finding itself at odds with the its own franchise owners.
"There's a real groundswell of resistance among the franchisees about this," said Richard Adams, a consultant for McDonald's franchise owners. He estimated the effort has a 50-50 chance of getting off the ground because of franchise opposition.
Store owners are balking at the plan's estimated $100,000 price tag to cover renovations and initial new equipment.
McDonald's said it's confident the new coffee will win over new customers and help individual stores boost annual revenue by about $125,000 once the coffee products, along with new bottled drinks, smoothies and other beverages are added to stores.
McDonald's first launched its so-called premium coffee about 18 months ago, followed by limited tests of sweet tea and iced coffee. Since then, it has added the specialty coffee drinks at about 800 U.S. stores, and it announced Tuesday that it intends to add the beverages to locations nationwide by early 2009.
A Starbucks spokesman declined to comment on the news, offering a company statement that it remains "focused on exceeding ... customers' expectations."