Christa Hoyland at QSR Web reports that McDonald’s highly publicized rollout of its McCafe specialty coffee line is more than halfway to completion and winning over coffee lovers along the way. More than 7,000 — or a little more than half — of U.S. stores now sell the espresso-based drinks, and the chain expects to meet its mid-2009 deadline, said Danya Proud, spokeswoman for the company.

The McCafe products include hot mochas, cappuccinos and lattes as well as iced coffees and mochas. The next phase in the chain’s specialty beverage rollout will come after the McCafe line is available in all stores and will include smoothies and frappes.

While McDonald’s delayed the rollout of its premium Angus burgers in October as the economy soured, Proud said the specialty beverage rollout, including tests of bottled beverages is on track.

“What the economy is doing, though, is just making sure that we’re getting these items right for our customers,” she said.
McDonald’s step into the specialty coffee arena is the company’s attempt at its piece of the $60 billion coffee industry, Proud said. The company, long the breakfast leader, worked its way into the category with a 2006 upgrade of its premium roast drip coffee. That product upgrade helped boost coffee sales 30 percent in the company’s second quarter 2007, according to the company’s conference call.

By the second quarter of fiscal 2008, McDonald’s CEO Jim Skinner said in that conference call that McDonald’s goal was to become a “beverage destination.”

McDonald’s entered the specialty coffee category with the opening of its first McCafe coffeebar in Australia in 1993. Ten years later, McDonald’s USA started testing the stores, with espresso-based beverages and specialty baked goods in a coffeehouse atmosphere. About 30 U.S. stores continue to operate a coffee bar in their stores.

While the McCafe coffee bars continue to grow in countries like Australia and Germany, McDonald’s recognized in its third quarter 2007 that drive-thru convenience, rather than the coffeehouse experience, was the key driver in the United States.
After thoroughly testing operations and determining the necessary drive-thru improvements, McDonald’s began rolling out its espresso-based specialty coffee line in the United States in January 2008, borrowing the McCafe name.

Drive-thru and lease-hold improvements cost about $75,000 per store, with McDonald’s paying 40 percent. The specialty beverage equipment, which includes equipment for the specialty coffees and upcoming smoothie and frappe rollouts, cost about $25,000 per store, according to the company’s third quarter 2008 conference call.

Seeing results:

Operators, like Scott Frisbie, a 25-year owner/operator for McDonald’s with 17 units in Orange County, Calif., are happy with the product and customer response.

“We’re pleased with the amount of (coffee) units that we’re selling,” Frisbie said, noting that seven of his stores sell the coffee line. “The initial success is exceeding my expectations. I’m proud of this product, and I’m really excited to see how my people are getting excited about it.”

Read More at QSR Web