McDonald's Files to Trademark Its Coffee

Published in CSP Daily News

May be contemplating competition with Dunkin, Starbucks on grocery shelves

OAK BROOK, Ill. -- McDonald's Corp. has filed a trademark for its own brand of ground and whole-bean coffee, reported Dow Jones, citing the U.S. Patent & Trademark Office.

The Oak Brook, Ill.-based burger giant has been expanding its coffee and specialty drink business since launching the McCafe menu about five years ago. These Frappes and flavored coffees have higher profit margins for McDonald's than much of its food menu, and have encouraged customers to stop by more often throughout the day.

Dunkin' Donuts, owned by Dunkin' Brands Inc., has said it sees strong sales of its bagged coffees in both grocery stores and the doughnut shops themselves.

McDonald's could be looking to get a seat next to Dunkin' on grocery-store shelves, based on the trademark registration, which was filed on September 18 and first reported by trade website BurgerBusiness.com.

The move could also merely be a preventative measure. If McDonald's doesn't have intentions of entering the packaged-coffee business, trademarking the McDonald's brand in coffee could prevent a competitor from using it.

"As you know, we are always looking at new and exciting ways to remain relevant to our customers and be where they need us to be," Danya Proud, spokesperson for McDonald's, told the news agency. "But this is not something I can confirm or deny at this time."

She added, "We register a lot of trademarks. That's nothing new for us."

The U.S. packaged-coffee category is a roughly $5.6 billion business, according to Starbucks Corp.. That represents a significant opportunity for McDonald's, if its customers are loyal enough to go buy their brand in grocery stores, too. Starbucks recently took its packaged-coffee business in house from Kraft to capture more of the profits, while Dunkin' still uses Smuckers for its distribution.

McDonald's is competing with other value-oriented coffee chains such as Dunkin' Donuts, as consumers look for fast, low-priced outlets in the morning.

Despite the struggling U.S. economy, McDonald's has a solid run of relative sales growth over the past few years, but in recent months, guest traffic increases have been slowing domestically, and higher costs have been weighing on the company's profitability.

McDonald's shares have fallen 10% so far this year, after experiencing one of the highest growth rates in the Dow Jones Industrial Average in 2011.

Some analysts say that as macroeconomic pressures subside next year, McDonald's will regain some of its strength. But even still, McDonald's still faces increased competition from Burger King Worldwide Inc. and Wendy's Co. The rival fast-food chains are revamping their menus and updating their marketing campaigns, hoping to better compete with McDonald's. Also, the fast-casual industry are stealing customers from traditional drive-throughs.