McDonald's, franchisees settle coffee fracas

Oak Brook-based McDonald's Corp. has agreed to pay its franchisees 40 percent of the expense of outfitting U.S. restaurants to serve specialty coffees after the restaurant owners resisted the hefty new costs.

The fast-food chain acknowledged its commitment Friday in releasing a statement of support from a group representing franchisees, who own a majority of its restaurants.

McDonald's announced last month it will add espresso coffee drinks, now being tested in more than 800 restaurants, in its 13,800 U.S. outlets starting next year.

But its owner-operators balked at the steep required expenditures. McDonald's USA President Don Thompson told analysts last month it could run as high as $75,000 per restaurant for remodeling and about $25,000 for initial equipment costs.

While McDonald's declined to elaborate Friday or discuss projected overall costs, based on Thompson's estimates the total price tag could be almost $1.4 billion and the company's portion may exceed $500 million.

The company says the investment could be paid off within three years by additional sales of its new beverages, including iced coffee and sweet tea.

Franchisees fully endorse and support the new initiative, Don Armstrong, who chairs the McDonald's National Leadership Council representing fellow owner-operators, said in his statement.

Following the company's commitment to contribute to capital expenses, he said the company and franchisees "continue to work together every step of the way in developing new beverage offerings for our customers."