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The Honolulu Advertiser
Posted on: Friday, March 2, 2007

Want a latte with those fries? It's McCafe

Video: Want a latte with your Big Mac?

By Andrew Gomes
Advertiser Staff Writer

A worker on Wednesday was readying a McCafe inside the newly rebuilt McDonald's restaurant in Makiki for its Sunday opening.

JOAQUIN SIOPACK | The Honolulu Advertiser

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First there was the Portuguese sausage-eggs-and-rice breakfast, and later saimin at Hawai'i McDonald's restaurants. Now there are lattes, frappes, cheesecake and brownies.

A variety of espresso drinks and foods more typical of specialty cafes are being introduced at select Hawai'i McDonald's restaurants as part of a test to possibly expand the concept nationally at the fast-food chain founded on burgers and fries.

The concept, dubbed McCafe, for many years has been a popular part of McDonald's restaurants in other countries, and is now being pursued as a strategy by the world's largest restaurant chain to boost U.S. store sales, especially in mornings and evenings.

"McDonald's really needs to look outside lunch and dinner for growth," said John Owens, a stock analyst with Morningstar. "This is a pretty savvy move on McDonald's part to capitalize on that."

Three McCafes inside Hawai'i McDonald's restaurants have opened in the last three months — on military bases in Kane'ohe and Pearl Harbor, and at the McDonald's on Nimitz Highway.

Eight more are planned, including one inside the Mililani Wal-Mart later this year and one slated to open Sunday inside a rebuilt McDonald's on Beretania Street in Makiki.

Oak Brook, Ill.-based McDonald's Corp., which has about 13,800 U.S. restaurants, currently has 11 McCafes in the country. The first domestic in-store McCafe opened in 2003 close to Raleigh, N.C.

However, McCafes were first established in Australia in 1993 and total more than 1,000 internationally.

Veronica Kaneko, president and managing director of McDonald's of Hawai'i Inc., said Hawai'i was selected as one of only a few U.S. test markets for McCafe, partly because the concept is popular in Asia, a region with close ties to Hawai'i.

"There's a big coffee market out there," she said. "That's what customers want. It's part of the lifestyle. We want to see what ... (the McCafe's) appeal is ... how well it takes off."

It remains to be seen whether McDonald's will capture a large enough share of the quality coffee-drinking market to compete on a level with Starbucks and other growing chains like Coffee Bean & Tea Leaf, but early responses have encouraged McDonald's executives.

Drew Mauden, a Seattle native and self-described Starbucks fan, on Wednesday took his first taste of a McCafe vanilla latte at the Nimitz McDonald's. "I'm a latte connoisseur," he said. "That's excellent."

McCafes use a separate counter and preparation station operated by a barista mixing a variety of coffee drinks, including white chocolate mochas and cappuccinos, as well as chai latte, iced coffees and fruit smoothies.

The espresso is made using a Lion Coffee french roast. Drink prices are generally between $3 and $4 for small, medium and large sizes. A shot of espresso is $1.45, and an Americano (espresso plus hot water) is $1.75.

McCafe food items generally cost $2 to $4 and include breakfast offerings such as muffins and cinnamon rolls, and desserts such as carrot cake, a caramel fudge cheesecake and a brownie.

The U.S. McCafe initiative follows the McDonald's switch last year to premium coffee, which helped the chain continue four consecutive years of higher profitability and increased sales at stores open for more than a year.

Another initiative to improve McDonald's operations has been an aggressive store renovation and redevelopment plan in which all 75 restaurants in Hawai'i are slated to be upgraded by 2012.

Most of the stores are being modernized. But some are being demolished and rebuilt, such as the Makiki store, which opened in 1972. The Palolo McDonald's, which opened in 1969, this summer will be the next to be rebuilt.

McDonald's was established in Hawai'i in 1968 by the late founder of Foodland Super Market, Maurice J. "Sully" Sullivan. Today, about 45 of the 75 Hawai'i restaurants are owned by franchisees. McDonald's Corp. owns the rest.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.