The economic crisis has took a big bite out of McDonald's big plans to expand their coffee market. They have been planning a premium coffee launch, with latte and cappuccino bars, to rival Starbucks and other premium coffee brands. It was originally set to be complete last April, with a smoothie line to follow. McDonald's denies that there is any problem getting a loan, but the fact they have pushed back their launch date to summer of 2009 for the coffee and 2010 for the smoothies, leads me to think differently. Bank of America has stated that they plan to honor all loans to McDonald's and do not plan to freeze any new loans.
If McDonald's has the loan, then it would not make any sense to launch a hot drink in the middle of summer. So, again it may say roses, but it smells like chicken poo. According to Advertising Age, 14,000 franchises have been struggling to get the capital to fund the $100,000 for the expansion. Advertising Age, Bloomberg, and several reputable news sources claim that a memo was sent from McDonald's Corporation to distribution franchises. The memo supposedly contained instructions for the 80% of franchises, that have not completed their coffee expansion, to seek alternative funding means. Essentially, the sender admits McDonalds was having a hard time getting the loan and would have to use summer revenues to proceed with the project.
All this coming from a company that reported an 8.5% sales rise in August . McDonalds ranked number one in Fortune magazines “ Most Admired Food Service Companies in 2008.” It is a Fortune 500 company. So, if they are rumored to not be able to get a loan, who can?
