McDonald's Brews A Cuppa Competition

Sandra Pedicini- Sentinel Staff Writer

Hoping to cash in on the specialty-coffee market, McDonald's has begun offering lattes, mochas and cappuccinos in many of its restaurants, including some in the Orlando area.

By mid-2009, all 186 Central Florida locations plan to offer McCaf� beverages from espresso machines that grind Arabica beans and shoot out steamed milk with the press of a button.

"They're a little watered down, but they're cheaper than Starbucks," said Nikki Roadcap, 27, of Maitland, sipping an iced vanilla latte at a Maitland McDonald's last week.

McDonald's officials downplay competition with Starbucks, whose name is synonymous with fancy coffee, trendy stores and high prices.

But in this economy, McDonald's could steal some Starbucks customers with its cheaper specialty coffees, said Steve West, a restaurant-industry analyst for Stifel Nicolaus.

"People don't really have the money to go to Starbucks and drop four or five bucks for a latte and a cappuccino anymore," West said.

Some might give up those luxuries altogether, West said, but others will trade down and buy a cheaper version at McDonald's. Locally, a 12-ounce McDonald's latte costs $2.29. A comparable-sized latte at Starbucks costs about $3.

On average, McDonald's coffees cost 65 cents less than those at Starbucks, West said. That price difference jumps to almost $1 for coffee drinkers who want a shot of flavor. Starbucks charges 30 cents; McDonald's adds flavored syrups for free.

The price difference appeals to people such as Cindy Servi of Longwood, who tried a McCaf� hot chocolate last week and found it better than she expected. "Good. Creamy chocolate. Better than what I would expect out of a fast-food place."

Now she hopes to convert her daughter.

"I'm going to get my daughter to get that iced mocha," she said. "She likes Frappuccinos from Starbucks for four-something. They're going to give Starbucks a run for their money."

Starbucks spokeswoman Deb Trevino said McDonald's won't lure away its loyal customers, who are "looking for high-quality coffee and convenient locations and for an experience that they can't get anywhere else."

Indeed, Starbucks does have some customers who wouldn't dream of buying their iced mochas anywhere else. West calls them "Starbucks groupies."

But Starbucks has to worry more about its less-loyal visitors -- the "fringe" customers, as West calls them.

"Starbucks can't afford to lose the fringe now in their turnaround efforts," he said. "You need every dollar of sales you can get."

So far, McCaf� sales in Central Florida have exceeded targets, said Deb Jones, an operations manager for stores in the region.

Next, McDonald's plans more beverages including smoothies, which Jones said are being tested in a few Central Florida stoers.

McDonald's, which has fared well in the tough economy, is also updating its look, remodeling many restaurants and even adding flat-screen TVs to some. Though the remodels are a separate initiative, the new look also gives the restaurants more of a modern, coffeehouse feel.

McDonald's first started becoming a serious player in the coffee market after upgrading its brewed java in 2006. The following year, Consumer Reports declared McDonald's coffee better than its competitors -- even Starbucks.

Upgrading the coffee gave McDonald's "more credibility with coffee drinkers," said Brian Wright, director of operations for several McDonald's locations in the Orlando area.

In introducing McCaf�s across the U.S., McDonald's will bring specialty coffees to rural America, which hasn't had much exposure to the Starbucks culture, West said.

"McDonald's is going to introduce specialty coffee to people that have never seen it before," he said. "I think that's a big opportunity for them. I think it will be good for the entire industry."

Sandra Pedicini can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. or 407-420-5240.

Price differences

Starbucks $3.00: Price of a comparable-sized latte 30 cents: A shot of flavor

McDonald's $2.29: Cost of a 12-ounce latte Free: A shot of flavor

Savings: $1.01

Just Roasted Coffees: PRICELESS!

Copyright © 2009, Orlando Sentinel

orlandosentinel.com/business/orl-mccafe2109jan21,0,3912506.story

Sentinel Staff Writer

January 21, 2009