Coffee perks up July sales at McDonald's
The Oak Brook, Ill.-based company said U.S. same-store sales, those at outlets open at least 13 months, rose 2.6 percent in July, while same-store sales in Europe climbed 7.2 percent, boosted by robust demand in the U.K. and France. In Asia, Africa and the Middle East sales perked up 2.1 percent, helped by stronger sales in Australia and longer store hours throughout the region, McDonald's said.
McDonald's said system-wide sales slipped 0.3 percent in July after factoring in currency fluctuations, but rose 6.2 percent excluding them.
McDonald's reported increase in coffee sales came amid a big advertising push that included complimentary beverages at some of its stores. Advertisements featuring the products have been a recent fixture on network TV.
The newly introduced McCafe line of hot and chilled coffee beverages mimics those found at competitors Starbucks and Dunkin' Donuts that feature added flavorings, milk and toppings. The drinks add more fuel to the so-called coffee wars and present consumers with an ever dizzying array of coffee products that are no longer limited to the simple hot morning fix. For example, the McCafe line includes seven hot or cold beverages.
To further promote its McCafe line, McDonald's has introduced a McCafe Your Day contest, asking customers to submit stories and photos featuring the products for a chance to win a $50,000 Visa gift card and a $500 McDonald's gift card.
For its part, Dunkin' Donuts is heavily promoting its Frozen Cappuccino brand of coffee drinks, offering $25 gift cards to Twitter users who offer to share a story about a "bold" experience. The theme ties in with Dunkin's promotion of the drinks as "our boldest most intense coffee indulgence yet." The Canton, Mass., company is privately held and doesn't disclose financial data, including sales.
Starbucks Corp. (SBUX), which has seen sales slide amid the current recession, last month reported higher earnings in the second quarter, despite a drop in sales. The Seattle-based company has had to battle perceptions that its products are pricey as consumers look for ways to cut back on expenses.
The former Wall Street darling has fought back by cutting costs, including shuttering nearly 700 U.S. stores, and boosting marketing, such as promoting an iced-coffee drink for around $2.
Shares of McDonald's were up nearly two percent in Monday afternoon trading in New York to more than $56 a share.