McDonald's Plan To Overtake Starbucks Is Hurting Business

McDonald’s is relying on its McCafe business to revive sluggish sales.

Last week, company executives said that expanding its coffee offerings would be a priority going forward. The fast food chain already offers about 15 McCafe items.

But McDonald’s vow to become the “envy” of Starbucks is hurting business, reports Leslie Patton at Bloomberg News.

The main problem is that the labour-intensive coffee drinks are overwhelming employees and slowing down service. Workers are bogged down by blending frappes and frothing lattes, which makes order times longer for everyone, according to Patton.

Franchisees have also complained about spending thousands of dollars on equipment to make McCafe beverages.

The McCafe model has fared better in Europe and Australia, where there are fewer Starbucks to compete with.

But actually succeeding in the U.S. is another story.

“I don’t think they’re going to be attracting the Starbucks customer to go there — I really don’t,” industry analyst Peter Telsey told Bloomberg.

In a presentation to investors, CEO Don Thompson defended the strategy.

“By selling coffee in grocery stores and in other outlets, we’re marketing the brand so a person is reminded to come into a McDonald’s restaurant,” he said.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.

Tagged In

retail-us warroom