The competition for morning customers has been fierce, and McDonald’s has recently applied for a trademark on the term “McBrunch” but has said nothing else about what that means. Are we to infer that breakfast hours will be stretched through the lunch hour? Will the menu be expanded to include brunch items like … mimosas? Will McBrunch be a weekend only event with a unique menu?
McDonald’s same-store sales in the United States have been sinking and the company has to do something to perk up sales. Breakfast has been a big contributor to what success the company has had, and increased competition from Yum! Brands Inc.’s (NYSE: YUM) Taco Bell, Starbucks Corp. (NASDAQ: SBUX) and Dunkin’ Brands Group Inc. (NASDAQ: DNKN) have not dislodged McDonald’s from its position at the top of the heap.
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Coffee drinks have performed well for McDonald’s, and the company is even expanding its McCafe brand into grocery stores next year, following an agreement with Kraft Foods Group Inc. (NASDAQ: KRFT). Bagged coffee and on-demand single cups will be available in a range of roasts and varieties.
The current free coffee promotion is coming too early help the grocery store sales and a McBrunch launch — should one be on the horizon — is likely even further in the future. So our guess is that McDonald’s is trying to bring more customers into its stores to buy some food item to go with that free cup of coffee. If it works, we’ll see the results in September same-store sales.
The last promotion ran through the first two weeks of April and McDonald’s U.S. same-store sales for the month were flat year-over-year. Same-store sales in the United States dropped 1% in May and were down 1.5% for the company’s second quarter ending in June. July’s same-store sales fell 3.2% and down another 2.8% in August. Free coffee appears to have helped.
The free coffee promotion runs from September 16 through 29.
McDonald’s shares traded up about 0.15% in the mid-morning on Tuesday, at $93.58 in a 52-week range of $90.53 to $103.78.
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