McDonalds Close to Expanding Beverages?

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October 22, 2007
McDonalds Close to Expanding Beverages?
By CSD Staff

Fast-food giant looking to boost sales by as much as $1.3 billion.

McDonald's Corp. may be counting on thirsty customers to pull in new profits. Exploring what it believes could be a billion-dollar annual sales builder, the fast food giant is seriously considering expanding its U.S. beverage offerings, from specialty coffee and bottled sodas to smoothies and sweet tea. By bringing in new beverage options, McDonald's plans to jolt the average annual domestic restaurant sales to $2.5
million. The current average is about $1.9 million.

The venture is generating controversy—and some opposition—among McDonald's franchisee community, according to CNNMoney.com.

The cost and payback are becoming major issues. Some operators say they believe a full-blown installation could cost perhaps $100,000 per restaurant, the amount varying on a location's current equipment. The additional beverage selections would be available both within the store and at its drive-through windows.

The upgraded premium blend coffee selection gave the chain's sales a boost last year. Since then, McDonald's has been slowly augmenting its beverage offerings. Iced coffee is being served in more than 7,000 U.S. locations, according to the report.

McDonald's is calling this new project a Combined Beverage Initiative. An internal document addressing frequently asked questions says the initiative would "help McDonald's become a credible destination for beverages by developing and implementing new profitable...offerings that our customers want."

According to the document, the company is projecting incremental sales of $100,000 per restaurant, which if all 13,700 U.S. restaurants were on board, could add more than $1.3 billion.