McDonald’s Corporation (NYSE:MCD) is planning to revamp its McCafe beginning next year. This is as a result of a decline in the burger maker’s coffee brand as it lost ground to rivals such as Dunkin Brands Group Inc (NASDAQ:DNKN) and Starbucks Corporation (NASDAQ:SBUX). The McCafe concept was launched eight years ago and brings in revenues of $4 billion per year on average, comprising 16% of the group’s sales.
Among the initiatives the company is taking include upgrading their espresso machines with ones that offer increased consistency in the taste of the drink. The new equipment will also have improved milk-steaming technology. Each unit will cost approximately $12,000.
Not the first choice
Though McDonald’s coffee brand has not been the first choice for coffee lovers, the company hopes the revamp will shake things up. The revamp will involve increasing product offerings.
“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,” a spokesperson for McCafe said.
Some of the marketing promotions slated for the relaunch include providing blended coffees of any size at $1. Also, for a limited time, a small specialty coffee will be on offer at $2.
Coffee boom
While the coffee business has been booming, fast-food firms have failed to benefit from the growth. While sales of fast-food firms were up 3.3% in 2015, that of coffee cafes rose close to 10%. Fast-food firms may face even more pressure in the near future as supermarkets have reduced food prices which have made eating at home cheaper than at a restaurant. To heighten the competition, there are other channels other than restaurants where ready meals are being sold and this includes gas stations.
Just like the Seattle-based Starbucks already does, McDonald’s is planning in 5 years time to be buying all its coffee beans from sustainable sources.
McDonald’s stock closed Monday’s trading session at $119.29 per share having edged up 0.89% while Dunkin Brands stock fell 1.82% to close the day at $53.28 a share.
Starbucks Corporation, on the other hand, rose 0.51% to close the day at $57.50 a share.
