McDonalds Corp (MCD)

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McDonald's to Sell Packaged Ground Coffee in Canada >MCD

Oct 25, 2012 17:31:39 (ET)


By Annie Gasparro

McDonald's Corp. (MCD) plans to start selling ground coffee in major Canadian stores in November.

The world's largest fast-food chain seems to be following in the footsteps of Dunkin' Donuts by selling bagged coffee under its famous brand, after building up a loyal customer following in its restaurants.

The Oak Brook, Ill.-based burger giant has been expanding its coffee and specialty-drink business since launching the "McCafe" menu in the U.S. about five years ago. These "Frappes" and flavored coffees have higher profit margins than much of the food McDonald's sells, and have encouraged customers to stop by more often throughout the day.

Last month, McDonald's filed for a trademark with the U.S. Patent and Trademark Office for use of its name on ground and whole-bean coffee.

While some speculate the chain could bring the bagged coffee to the U.S. next, a McDonald's spokeswoman said, "We have no other plans to sell the coffee elsewhere at this time."

McDonald's has registered many trademarks for titles that have gone on to become menu items, such as the "McCruncher," a chicken sandwich the chain began test marketing in May, a month after filing for the trademark; and the "McCafe" moniker, which it also filed for around the same time as it began selling the specialty coffee drinks.

Packaged coffee is a roughly $5.6 billion business in the U.S., according to coffee giant Starbucks Corp. (SBUX), representing a significant opportunity for McDonald's. Coffee recently represented more than 6% of McDonald's U.S. sales, up from 2% in 2004, as customers become more loyal to the brand for their morning routine.

Dunkin' Donuts, owned by Dunkin' Brands Inc. (DNKN), has reported strong sales of its bagged coffees and, more recently, of its K-Cup coffee pods for use in Keurig single-serve brewers.

McDonald's also said Thursday it would potentially consider making single-cup coffee packets, to be used in Keurig machines or similar brewing systems, over the long term.

News of McDonald's bagged coffee and possible entrance in to single-serve coffee was reported earlier by Reuters.

McDonald's Canada will begin selling the McCafe Premium Roast bagged coffee for 6.99 Canadian dollars for 340 grams, beginning Nov. 8.

Write to Annie Gasparro at [e-mail]

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(END) Dow Jones Newswires

October 25, 2012 17:31 ET (21:31 GMT)