McDonald's newest menu items should terrify Starbucks (MCD)

pulse

September 6, 2017 2:02 PM

McDonald's newest beverages sound like something you'd order at Starbucks.

On Wednesday, McDonald's announced that it had added a new set of espresso-based drinks to the menu: the caramel macchiato, vanilla cappuccino, and americano. The drinks, along with all McCafé specialty beverages, will be available for $2 for a limited time.

For comparison, a tall caramel macchiato at Starbucks costs nearly twice as much, at $3.95. A tall Starbucks cappuccino costs $2.95, and a caffé americano costs $2.25.

McDonald's launched the coffee brand McCafé in the US in 2009. McCafé now generates about $4 billion annually in the US.

McDonald's also announced a McCafé brand revamp, debuting a new logo and cups that feature a cleaner, more minimalist design, and colors that will change based on the season.

The more sophisticated new beverages and updated branding are part of the fast-food giant's plan to grow its coffee business and compete with chains such as Starbucks.

Earlier in 2016, McDonald's launched a successful campaign to highlight McCafé's low prices. A deal that priced coffee and soft drinks at $1 and other McCafé beverage at $2 helped grow US same-store sales 1.7% in the first quarter and 3.9% in the second quarter.

Executives have said that coffee is a crucial part of the company's plan to convert casual diners to loyal customers. To do so, McDonald's is "elevating and leveraging the McCafé coffee brand," according to the company's 2016 annual report.

McDonald's also announced Wednesday that it is launching a new bottled McCafé Frappé line in grocery stores. The ready-to-drink Frappé will come in three flavors: caramel, vanilla, and mocha.

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