Fast-food king McDonald's tries its hand in the high-profit world of the upscale coffee shop with its McCafe chain.
By Associated Press
Published December 4, 2003
SAN JOSE, Calif. - Conrad Freeman isn't your stereotypical high-tech entrepreneur, but Wednesday he launched one of the nation's most cutting-edge startups.
Freeman, who owns a popular McDonald's hamburger franchise in Mountain View, Calif., began peddling delicacies such as skinny double mochas and roasted beef with balsamic vinegar on foccacia at the grand opening of the West Coast's first "McCafe." Instead of Egg McMuffins and Styrofoam cups of joe, he and a staff of 13 - including baristas who completed a 40-hour training course - serve buttery brioche and cafe Americano in porcelain cups (or paper, if you order to go).
"What we see now is that Mom comes in and buys a Happy Meal for her child, but she doesn't order anything because there's nothing she wants to eat at McDonald's," said Freeman, whose McCafe is modeled after a pilot program in Raleigh, N.C. "Now she can come in an indulge in a latte and gourmet muffin, maybe a piece of chocolate cheesecake."
McCafe is McDonald's attempt to steal profits from Starbucks, Peet's Coffee & Tea and other upscale chains, increasingly viewed as prime competitors of the Oak Brook, Ill., fast-food giant.
Gourmet coffee - which can top $4 per cup for fancy blended drinks - has a greater profit margin than burgers and fries. More sophisticated morsels may also appeal to San Francisco Bay Area food snobs, who often disdain McDonald's emphasis on kids and commuters.
The Mountain View McCafe, where sandwiches cost about $4.50 each, adjoins the standard McDonald's restaurant and features plush love seats and mood lighting, as well as wireless Internet access to encourage patrons to linger longer - ideally with a second double espresso.
Although the McCafe serves chicken and feta on panini, Freeman hopes some of McDonald's working-class ethic percolates through its more effete offshoot.
"Think back to the first time you ordered a latte, and you weren't even sure whether "grande' meant large," Freeman said, referring to Starbucks' oft-mocked sizes: tall, grande and venti.
"We have small, medium and large. We're approachable and a lot less intimidating."
