McDonald's aims high with first U.S. coffee shop

Source: Associated Press
CHICAGO -- Hold the fries -- make it a latte and a scone to go.

Hoping to win over some of the gourmet coffee crowd from Starbucks, McDonald's is opening its first U.S.-based McCafe this week in downtown Chicago after enjoying success with the concept abroad.

The experimental McCafe, located behind Marshall Field's flagship department store and sandwiched between busy Michigan Avenue and State Street, offers high-end coffee and desserts in a 30-seat cafe designed to look like a French bistro.

If it works, restaurant industry experts say dozens or hundreds more U.S. McCafes could follow. If it doesn't, it will join such failures as Arch Deluxe, McPizza and the Big Xtra in the recycle bin.

"If it takes off, it could be a great new thing for McDonald's. It's a good complement to their existing restaurants," said Douglas Christopher, analyst for Crowell, Weedon and Co. in Los Angeles. "But there's competition from Starbucks and some individual places. It remains to be seen."

McCafe is the fast-food chain's latest effort to beef up domestic sales whose growth has shrunk as the fast-food market nears saturation point. Other recent innovations include new menu items, a prototype diner in Kokomo, Ind., and adding such chains as Boston Market, Chipotle Mexican Grills and Pret A Manger.

On Tuesday, while patrons of the adjacent McDonald's lunched on the usual burgers and shakes, apron-wearing McCafe employees poured $2.49 cappuccinos and $1.40 espressos and served $2.59 tiramisu, $2.49 cheesecake and $1.59 muffins and scones in a final test run for Wednesday's opening.

While the city's elevated trains rumble by, customers will eat their upscale desserts on fine china with stainless steel silverware.

At a Starbucks two blocks away, attorney and coffee customer Barbara Susman was dubious. She said she'd try McCafe only if the line at Starbucks was too long.

"I think they'll have image and ambience problems," she said. Gourmet coffee and desserts, Susman said, is "just not McDonald's image."

Some analysts, too, have criticized McDonald's for straying too far from its core offerings and confusing customers with its fast-changing image.

Besides stiff competition, McDonald's has been challenged lately by a decline in European sales due to fears about mad cow disease and by weak currencies affecting sales in its nearly 15,000 restaurants overseas.

"We are aggressively looking for ways to grow our business under the Golden Arches, and McCafe gives customers another reason to visit McDonald's," said Alan Feldman, president of McDonald's USA.
Source: Associated Press