Mickey D's Risks Big in Java War

New coffee line is risky business for Golden Arches, Tribune says
By Wesley Oliver,  Newser Staff
Posted Feb 24, 2008 5:58 AM CST
Adding fancy coffees and other specialty drinks is a bold move intended to make McDonald's a beverage destination and a rival to Starbucks and other coffee chains. It's a key strategy aimed at luring...   (Getty Images)
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(Newser) – McDonald’s may have Egg McMuffin on its face if it can't out-grind Starbucks with a new line of premium coffees, the Chicago Tribune reports. The new coffee rollout, threatened by a shaky economy, marks one of the company’s riskiest launches ever, according to analysts. As food and labor costs rise, McDonald’s is asking franchises to invest up to $100,000 per store in java equipment.

The new “beverage cells” won’t offer Starbucks-level customization, but their coffees will cost 25% less—and tests show that required extra customer service time can be kept at 90 seconds or less. But one owner calls it a "crap shoot." With Starbucks stock already dropping nearly 50% over the last year, an analyst warned that "high-priced coffee might be seen as more of a luxury item and may be more of a difficult sell in an economic downturn."