McDonald's to expand flavored coffee sales to restaurants, but not nationwide (yet)

McDonald's will no longer limit its flavored coffee to just supermarkets. The fast food chain has started to offer brewed flavor coffee at restaurants in at least one US market, though it isn't clear if this will be extended nationally.

Yuya Shino/Reuters/File
A customer using his mobile phone is seen next to a McDonald's logo at a McDonald's store in Tokyo July 22, 2014. On the hunt for incremental customer traffic, McDonald’s is looking at flavored McCafé hot coffee

On the hunt for incremental customer traffic, McDonald’s is looking at flavored McCafé hot coffee. The burger chain has served flavored iced McCafé coffees since 2007, a year after it introduced its Premium Roast coffee, and it offers French Vanilla and Hazelnut flavors in the bagged coffee it sells in supermarkets in collaboration with Kraft. But hot coffee options in its restaurants are limited to regular and decaf.

However, in at least one U.S. market the chain is offering brewed Caramel, Hazelnut and French Vanilla McCafé coffees, a McDonald’s spokesperson confirmed to The coffees are offered for $1.39 for any size cup. A TV commercial supports. The spokesperson said flavored coffee is a Local Option menu item being promoted in one market but the beverages are not now being introduced nationally.

The scope of the sales opportunity flavored coffees present makes them an appealing product for McDonald’s to consider.

Packaged Facts puts 2014 retail and foodservice coffee sales at $48 billion, with foodservice accounting for 77% of that. In 2010, former McDonald’s CEO Don Thompson said coffee accounted for 6% of U.S. sales, although it likely is larger now due to expansion of the McCafé brand. But even 6% of McDonald’s 2014 domestic sales of $35.4 billion is more than $2.1 billion, showing the drink’s importance.

When it introduced flavors of its VIA instant coffee in 2010, Starbucks valued the flavored-coffee market at $377 million and said 11% of American households purchase flavored coffee. McDonald’s would welcome as many of those consumers as possible.

“We’re enhancing the breakfast experience by creating more of a coffee culture through high-quality McCafé products,” Thompson told analysts during a quarterly earnings call in January 2014, a year before Steve Easterbrook replaced him as CEO. “We know that coffee drives the visits at our breakfast time,” Thompson added. Breakfast accounts for an estimated 25% of the chain’s sales.

Competitors Dunkin’ Donuts and Starbucks sell some flavored hot coffees but other burger-menu competitors such as Burger King, Wendy’s, Jack in the Box do not. Breakfast latecomer Taco Bell offers only a Cinnabon Delights coffee creamer to add to the Seattle’s Best coffee it serves

Meanwhile, CNBC reported on Friday that McDonald’s plans to increase the pre-cooked weight of its Quarter Pounder burger patty to 4.25 ounces from the current 4 ounces in order to give diners a “juicier and more flavorful burger,” according to internal documents reviewed by CNBC.

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