McDonald's Eyes Lattes

McDonald's Eyes Ballooning Coffee Market, but Franchisees Not Happy

McDonald's Corp. wants its franchisees to expand coffee capabilities in offering lattes, mochas, cappucinos and espressos at about 50 cents less than Starbucks. It sees itself as becoming a formidable player who can eat into Starbucks coffee drinking market. But its franchisees may put a kibosh on its new latte initiative.

"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. And many are concerned that little customer interest in McMochas means it will could take years to recoup their investment, even on the famously high-margin coffee drinks. (Excerpt from McDonald's Eyes Coffee Market, AP)

But McDonald's Corp insists individual store revenues will be lifted by $125,000 per year once the coffee, water and smoothies - yes, smoothies - are added.