McDonald's Coffee Strategy "On Track," Executives Say

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McDonald's Coffee Strategy "On Track," Executives Say

CHICAGO -- While most restaurant chains are struggling amid the weak economy, McDonald's posted strong sales thanks in part to its inexpensive menu, The Wall Street Journal reported. Last week, the company reported its third-quarter profit rose 11 percent, helped by strong sales growth.

This past summer, McDonald's added McCafe coffee drinks to more than 3,000 of its nearly 14,000 U.S. locations, and over the past several months, has been quietly tweaking its beverage plan based on customer feedback, the report stated. For example, drinks are topped with chocolate drizzle instead of chocolate powder, and milk selections have been condensed to non-fat and whole. Also, new coffee cups have less printing on them.

Additionally, The Wall Street Journal reported focus groups prompted the company to explore a new type of hot and cold drinks that won't be made with coffee. At some restaurants in the Detroit area, McDonald's is testing iced and hot drinks made with just chocolate, caramel and mint flavoring, the report stated. The idea is to capture customers who like the idea of coffee drinks, but not the actual taste. Chocolate "gives people permission to introduce themselves to these drinks," said Darci Forrest, a McDonald's senior director of marketing, in the report.

And despite reports that the espresso beverages are not selling as well as expected, McDonald's executives say the beverage program is on track and doing well.

However, this summer, internal documents showed sales of the drinks in several markets peaked about three weeks after the launch, and then declined in the following weeks, in some cases sharply, according to the documents, which were viewed by The Wall Street Journal.

Management contends the drop was due in part to a lull in demand for hot drinks during the summer, and that the full potential of the drinks can't be realized until they're backed by national advertising, the report stated.