FESmag

Mark Godward

McDonald's Enters the Espresso Lane
November 26, 2007

Last week, McDonald’s announced plans to step up its efforts in the expanding coffee market. If you missed the story, you can view it here.

Basically, McDonald’s wants to become known as a destination for beverages in addition to burgers. The Oak Brook, Ill.-based company wants to claim its share of the growing coffee market that’s dominated by such traditional powers as Starbucks, Caribou and even Dunkin’ Donuts. McDonald’s will do so by offering espresso-based and other coffee-related drinks that you typically find in these places.

Of course, the typical McDonald’s unit does not presently contain the proper equipment to support such additions to its menu, meaning this will require additional capital outlays by franchisees. The article mentioned earlier estimated the price tag could reach $100,000 per store.

McDonald's must feel that it is easier for them to get into espresso than for an espresso concept to get into burgers. However, there has been a significant increase of hot food items going into coffee concepts, even convenience stores. Specifically, Dunkin' Donuts and Starbucks have leveraged rapid cooking technologies to offer hot sandwiches, or other products, in many of their stores. Subway has leveraged similar technology to go from a predominantly cold sandwich concept to having an array of hot products. (Quizno’s started that trend with its toasted sandwiches.) Wawa also offers hot sandwiches with rapid cooking equipment. Convenience stores, too, are offering an array of "delivered fresh daily" sandwiches that could be re-heated there or taken as ready-to-heat.

There is no question that as food and equipment technologies facilitate easy execution of a wider array of foods, the variety of offerings will increase at most foodservice locations. Equipment suppliers can benefit by helping to identify those opportunities early and keep their customers ahead of the competition.

But back to espresso … Remember, this is not a zero-sum game. Think of Europe and South America. Espresso is everywhere. The availability of espresso in such a ubiquitous concept means that people will simply drink more of it. The more it’s available, the more you drink it, and the more you want it!

Will this pave the way for other concepts (like Subway, for example) to offer espresso beverages in many more locations? Of course. And if McDonald’s offers it across the board, then Burger King will have to offer it, too. Supermarkets and c-stores are next. My local 7-11 is preparing to offer espresso drinks. With the options for automated equipment, it’s entirely possible that you can get a decent espresso without the barista.

One thing is for sure, there will be a significant increase in demand for espresso beverage equipment.

Posted by Mark Godward on November 26, 2007 | Comments (0)