OAK BROOK, Ill. -- McDonald's Corp. told its U.S. franchisees late last week that it will pay up to 40% of costly renovations needed for the rollout of its specialty coffee program, reported The Chicago Tribune.
McDonald's foray into specialty coffees, smoothies and other upscale beverages constitutes one the company's largest product rollouts ever. And it will be expensive, costing franchisees around $25,000 for equipment and up to $75,000 to retool their restaurants to handle the new beverages, according to the report.
Some [image-nocss] franchisees have worried whether the potential pay off for the beverage offensive is worth the big investment, one of the largest they've ever been asked to make by McDonald's, the newspaper said. Franchisees own about 85% of McDonald's nearly 14,000 U.S. restaurants.
"McDonald's has offered us several contribution options that we can choose to most effectively implement [the beverage initiative] in our restaurants," Don Armstrong, head of McDonald's franchisee association, said in a press release cited by the Tribune. He added that growth opportunities like the beverage offensive are "whole-heartedly endorsed" by franchisees.
McDonald's is aiming to follow up on its hugely successful premium coffee, which was introduced last year, by moving into the fast-growing and lucrative specialty coffee business, serving up caramel cappuccinos, vanilla lattes and similar beverages.
Stock analysts have praised the move, saying it's an important way for McDonald's to continue its impressive run of sales and profit growth.
McDonald's believes the beverage initiative could have a big pay off for franchisees, estimating an additional $125,000 in annual sales per restaurant when it is fully implemented.
The Oak Brook, Ill.-based company has been testing specialty coffee in about 800 restaurants nationwide this year. Last month, it announced its plans to rollout the concept nationwide. Given the investments required, the national rollout will take considerable time and isn't expected to have an impact on McDonald's nationally until mid-2009.
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