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McDonald's caffeine surge: Burger chain to refresh its $4 billion coffee brand
McDonald's (MCD) McCafe concept is getting a makeover.
The burger chain is slated to revamp its $4 billion coffee brand in 2017 as part of an effort to take on rivals Starbucks (SBUX) and Dunkin' Donuts (DNKN), Bloomberg reports.
The Golden Arches is "recommitting" to McCafe, a spokeswoman told CNBC.
"We know preferences are changing and people today are looking for great taste, high quality, value, and even more choice and flexibility than ever before," she said. "In order to evolve with those changes, we are enhancing the McCafé experience. This includes new seasonal flavors and enhancements to our beverage line up, a focus on sustainable sourcing of our espresso and coffee beans, a rewards program through our mobile app, and training crew members to deliver delicious beverages and great service for our guests."
In the first quarter of 2017, the company will offer $1 any-size McCafe signature blend coffee and $2 small specialty coffee — including lattes and mochas — as part of a limited-time promotion.
McDonald's has not traditionally been the go-to source for higher quality coffee beverages, but the burger joint hopes that this shake-up could help boost its coffee business.
The coffee brand is "a very important piece," Kristy Cunningham, U.S. senior vice president of strategy and insights, told Bloomberg. "It gives us the chance to follow what the customer is really looking for."
Sales at burger chains have grown 3.3 percent in the last year, a fraction of the 10 percent growth coffee cafes have seen, according to Bloomberg, which cited the research firm Technomic.
McDonald's has attempted to gain traction with consumers by offering a buy-five, get one free deal for its McCafe beverages. Traction in this area would be helpful as the benefits from McDonald's all-day breakfast promotion are starting to fizzle.
Last quarter, McDonald's same-store sales rose 3.5 percent, with across-the-board improvement in all its global sectors, however, U.S. growth was more tepid. U.S. sales gained only 1.3 percent, proving that McDonald's isn't immune to persistently soft traffic within the U.S. restaurant industry.
The Golden Arches' cafe brand isn't the only aspect of the company getting an upgrade. The burger chain revealed last month that its restaurants will be getting revamped as part of an effort to become a "modern and progressive burger company."
McDonald's will be adding self-service ordering kiosks, craft burgers and table service to its stores.
"It's going to continue to be a slow build for them, especially in this type of environment where the customer expects a deal," Will Slabaugh, analyst at Stephens Inc., told Bloomberg said of the McCafe shift. "I don't expect that to be a huge needle mover for them."
Read the full article on Bloomberg.
— CNBC's Susan Li contributed to this report.
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