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McDonald's stores in Denver ready to battle Starbucks

By Joyzelle Davis, Rocky Mountain News (Contact)

Published October 30, 2008 at 12:05 a.m.

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Supervisor Ron Bucar passes out samples of specialty coffee drinks at the McDonald's at 5550 W. Dartmouth Ave. in Denver.

Photo by Dennis Schroeder / The Rocky

Supervisor Ron Bucar passes out samples of specialty coffee drinks at the McDonald's at 5550 W. Dartmouth Ave. in Denver.

A specialty coffee drink at McDonald's.

Photo by Dennis Schroeder / The Rocky

A specialty coffee drink at McDonald's.

Coffee wars Sandra Wattles makes a latte in the McCafe area of the McDonald's at 5550 W. Dartmouth Ave. in Denver. The restaurant chain is trying to capture Starbucks customers who might want a premium cup of coffee for a cheaper price. McDonald's is revamping all 110 of its Denver-area outlets to add "McCafe" corners that serve a variety of espresso drinks. McDonald's will launch the McCafes on Wednesday.

Photo by Dennis Schroeder / The Rocky

Coffee wars Sandra Wattles makes a latte in the McCafe area of the McDonald's at 5550 W. Dartmouth Ave. in Denver. The restaurant chain is trying to capture Starbucks customers who might want a premium cup of coffee for a cheaper price. McDonald's is revamping all 110 of its Denver-area outlets to add "McCafe" corners that serve a variety of espresso drinks. McDonald's will launch the McCafes on Wednesday.

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McDonald's, already the nation's biggest hamburger chain, is escalating its simmering breakfast battle with Starbucks as it rolls out espresso drinks at all 110 Denver-area locations next week.

McDonald's is overhauling all of its restaurants in the region to include a McCafe that serves a premium line of iced and hot lattes, cappuccinos and mochas. Denver stores will officially begin serving the coffee drinks on Wednesday, relatively early on in the restaurant chain's national rollout, which started this summer. Some 3,500 of McDonald's 14,000 U.S. stores offer the premium coffee drinks.

After the success of the upgraded drip coffee it introduced in 2005, McDonald's is stepping up its challenge to Starbucks' espresso empire at a time when penny- pinching consumers are trading down. Most of the McDonald's drinks are about 50 cents cheaper than Starbucks, although the prices at both chains vary from store to store.

"Our customers love that it's affordable," said Laura Bucar, who owns three metro-area McDonald's franchises with her husband, John. Her store in the Bear Valley neighborhood is one of two in the region that have tested the coffee drinks since March. "Some of our customers have switched from other places, and some of our customers had never tried a latte before" because of the price.

McDonald's hot mocha, made with chocolate syrup, espresso, steamed milk and whipped cream, costs anywhere from $2.29 for a 12-ounce cup to $3.29 for a 22-ounce cup, depending on the store. Starbucks, meanwhile, charges in the range of $2.85 for a 12-ounce small mocha to $3.70 for a 20-ounce.

By adding premium coffee drinks, McDonald's is moving into one of the fastest-growing menu areas in restaurants, and drinks have far higher profit margins than food. Other fast-food companies, including Jack in the Box and Wendy's, are also attempting to win coffee customers as Starbucks retrenches following an overly aggressive expansion. Starbucks, in turn, has added more breakfast items to its menu, including hot oatmeal and toasted breakfast sandwiches.

Sales of gourmet coffee drinks have soared in recent years. Some 17 percent of the adult population consumed a "gourmet" coffee beverage on a daily basis in 2008, compared with 14 percent last year, according to the National Coffee Association. Consumption is highest among 18- to 24-year-olds, who drank 3.2 cups per day this year compared with 2.5 cups in 2005.

Whether the weak economy prompts latte addicts to brew their own coffee at home remains to be seen. McDonald's so far this year has benefited from budget- minded consumers, reporting earlier this month that third-quarter profit rose 11 percent.

The espresso drinks mark the McDonald's chain's biggest menu addition in 30 years. Eventually, the restaurant plans to add smoothies and is testing iced and hot drinks made with just chocolate, caramel and mint flavoring.

"It's a different business for us," said Bucar, who has trained every staff member at her store to run the coffee machine and run them though taste tests so they can speak knowledgeably about the difference between a latte and a cappuccino. "It's not like we're adding a new sandwich to our menu."

McDonald's has estimated that adding the McCafes cost $100,000 per location for the new coffee machine and retrofitting, an expense that's shared between the restaurant and the franchisee.

Denver-based coffee shop Dazbog, which has 19 stores in Colorado and another six under construction, isn't worried about this caffeine encroachment by McDonald's. Dazbog co-founder and chief operating officer Leonid Yuffa says Dazbog attracts a different customer than McDonald's does, and in recent months his chain has seen sales rise despite the shaky economy.

"Coffee is one of those luxury items that make you feel good every day, like you've started your day right," Yuffa said. "People may make a New Year's resolution that they're going to give up paying for coffee, but if you love the best coffee, you just can't."

What's brewing

McDonald's will roll out premium espresso drinks at its 110 Denver-area stores starting Wednesday, adding upgraded drip coffee the restaurant chain introduced in 2005.

On the menu:

* Lattes (iced and hot) * Cappuccino * Mocha (iced and hot) * Steamed milk * Hot chocolate

Comments

  • October 30, 2008

    6:39 a.m.

    Suggest removal

    LOUIE writes:

    La Dame Magnifiso pictured above dumps the tray, they pay; what was the last settlement?

  • October 30, 2008

    6:56 a.m.

    Suggest removal

    SirRealist writes:

    This is news? When did the RMN begin advertising for Mickey D's?

    Let me help you anyone understand a little secret who doesn't already know it. The world's largest fast-food (questionable that is actually is "food") joint has been helping clog people's arteries, raise their blood pressure, and put them in ever-increasing sizes of clothes for many years (see the movie, "Fast Food Nation" for more info)

    They have oftentimes lied about their food and methods, having been caught adding extra fat to their burgers and putting the grease from those burgers into the their "vegetable oil" deep fryers used for their fries, among other infractions. So their benevolent intentions of offering a cup of Joe for 50 cents less than Starbucks should only be considered for what it is; an attempt to take advantage of a potential revenue source. No problem there, but don't be misled into thinking they will naturally use the "best" or "natural" ingredients, something that true coffee houses, including Starbucks, take great pride in doing. If there's a shortcut, rely on McD's finding and exploiting it.

    For everyone, many things are personal taste - cigars, Scotch, cola, sweets, and coffee. What tastes great to one person may not seem so to another. But for those of us who have had the privilege of enjoying java from many of the great coffee houses in Europe, Africa, and Scandinavia, those experiences are more closely re-enacted in places like Peaberry and Starbucks, and not in McDonalds, Dunkin Donuts, or Wendy's. The grease joints are fine for a quick cup on the run, and they are handy, but they aren't and never will be a "great cup of the world's finest coffee" to people who know what one is.

  • October 30, 2008

    7:39 a.m.

    Suggest removal

    RealifeTauren writes:

    Australian McDonalds have been serving espresso via their McCafe brand for well over a decade, and the coffee is actually pretty good. They beat Starbucks to the punch down-under, and Starbucks has a hard time getting a good foothold there. In part because of McCafe, but mostly because there's hardly a cafe without an espresso machine, and people don't have to go out of their way to go to a coffee shop. Amazing coffee is simply available.

  • October 30, 2008

    8:15 a.m.

    Suggest removal

    LadyBird112 writes:

    I'm sorry, I just can't picture McDonald's and coffee in the same sentence and not feel sick.