Mickey D's Risks Big in Java War

New coffee line is risky business for Golden Arches, Tribune says
By Wesley Oliver,  Newser Staff
Posted Feb 24, 2008 5:58 AM CST
Mickey D's Risks Big in Java War
Adding fancy coffees and other specialty drinks is a bold move intended to make McDonald's a beverage destination and a rival to Starbucks and other coffee chains. It's a key strategy aimed at luring more customers for snacks between meals. It also is one of McDonald's riskiest product launches ever,...   (Getty Images)

McDonald’s may have Egg McMuffin on its face if it can't out-grind Starbucks with a new line of premium coffees, the Chicago Tribune reports. The new coffee rollout, threatened by a shaky economy, marks one of the company’s riskiest launches ever, according to analysts. As food and labor costs rise, McDonald’s is asking franchises to invest up to $100,000 per store in java equipment.

The new “beverage cells” won’t offer Starbucks-level customization, but their coffees will cost 25% less—and tests show that required extra customer service time can be kept at 90 seconds or less. But one owner calls it a "crap shoot." With Starbucks stock already dropping nearly 50% over the last year, an analyst warned that "high-priced coffee might be seen as more of a luxury item and may be more of a difficult sell in an economic downturn." (More McDonald's stories.)

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