Coffee Leaves ‘Em Jumpy

Chicago Tribune:

McDonald’s Corp.’s ambitious plans to serve up fancy coffee drinks and smoothies at its U.S. restaurants are sparking worries among its legion of franchisees, who must foot a big part of the bill for the beverage offensive.

Oak Brook-based McDonald’s last month unveiled a full-scale move into upscale coffee drinks, after testing the concept at about 800 U.S. outlets. It is a bold move intended to make McDonald’s a beverage destination, but restaurant franchisees must invest up to $100,000 to accommodate the plan.

And it comes at a time where franchisees’ profit margins are under pressure from rising labor and commodity costs. McDonald’s relations with its franchisees, who own about 85% of the company’s nearly 14,000 U.S. restaurants, have been good for the past few years, and there’s no sign that is fundamentally changing.

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