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Instant Analysis: McDonald's Wants You to Make Your Own McCafe

By Jeremy Bowman - Apr 9, 2016 at 9:32AM

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The fast-food giant is experimenting with a DIY gourmet coffee drink kiosk.

What happened? Continuing in its recent trend of bringing more automation to its restaurants, McDonald's Corp. (MCD 2.14%) is experimenting with a self-serve McCafe kiosk at one of its Chicago locations. Like the company's self-pay kiosks and its Create Your Taste menu, the idea seems to be a response to customers' desires for easier customization, as well as to rising pressure on food service wages; California and New York both recently enacted laws that will raise their minimum wages to $15 an hour over the next several years.  

The kiosk offers customers who are interested in just an espresso drink an easy way to skip the lines and get one quickly. With the exception of the payment system, the machines are virtually identical to the ones on the other side of the counter that employees use to make drinks. 

Does it matter? The McCafe menu has long been targeted by franchisees as an example of menu bloat;  they insist that the company's new menu items and limited-time offers have made operations much more difficult, especially after the company launched all-day breakfast. A McCafe kiosk would not only reduce the workload of the cashiers, but also of the kitchen staff.

The McCafe kiosk also provides an important distinction from Starbucks (SBUX 2.03%), as the leading coffee chain prides itself on "coffee as theater," and would never allow its customers to make their own lattes simply by pushing a button. Starbucks at one point had its baristas using similar fully automated machines, but went back to a more traditional technique of manual espresso brewing as it sought to recapture its authenticity.

With 14,000 restaurants nationwide, McDonald's has a great deal to lose from the push to raise the minimum wage, and wages for food service workers specifically. Though most of its restaurants are franchised, the company needs to keep its operating partners satisfied, and finding new ways to automate operations, therefore lowering costs and streamlining service, is an excellent way to do that. I'd expect to see more innovations such as this one from McDonald's in the coming years.

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McDonald's Corporation Stock Quote
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