Late Nights and Coffee in McD’s Future
By George Anderson
CEO Jim Skinner of McDonald’s told investors the fast food chain is looking to take another shot at getting the company’s McCafés store-within-a-store concept right here in the U.S.
The coffee and pastry shop concept has been well received in Australia and other international markets but didn’t take hold when initially tested in the U.S. McDonald’s closed a McCafé in Chicago four years ago after a short trial, reports Crain’s Chicago Business.
McCafés could be a boon to U.S. restaurants if they are able to achieve similar success.
Prudential analyst Larry Miller wrote in a research report, “McCafés boosted sales in New Zealand by $300,000 per unit on an investment of $150,000.”
Another approach McDonald’s is taking to generate greater revenue at existing locations is encouraging franchisees to open for business 24 hours a day (good coffee being a must).
According to another report from Crain’s, 20 percent of McDonald’s in the U.S. are now operating round-the-clock and the company feels it can leverage a move by more restaurants in key markets to advertise this point of difference.
The upside for McDonald’s corporate headquarters is clear according to Crain’s: “If restaurants can generate just $150 between 11 p.m. and 6 a.m. selling 30 Big Mac combo meals would do it that translates to an extra $55,000 a year per restaurant. If half the McDonald’s in the U.S. can do that, that’s $374 million more in sales a year. And since McDonald’s U.S. stores average $1.7 million in annual sales, the company can post revenues equivalent to that of 220 more restaurants without having to build them.”
Not everyone is sold on the idea. Dale Gibson, a former McDonald’s franchisee near Salt Lake City, said, “The corporation will get its money, but the operator is the one sucking down the costs… to get people to work the graveyard shift, you have to pay more and you’re more susceptible to theft.”
Moderator’s Comment: Do steps such as McDonald’s re-testing its McCafé concept and encouraging its franchisees to operate restaurants 24/7 provide
the fast food chain with a point of difference in the marketplace? What does McDonald’s need to do to further differentiate itself from its broad list of competitors?
George Anderson – Moderator
- McDonald’s to revive McCafés – Crain’s Chicago Business
- Golden Arches aglow all night? – Crain’s Chicago Business