By
Annie Gasparro and Julie Jargon
October
3, 2012
McDonald's Corp. filed a trademark using
its name for ground and whole-bean coffee, signaling that the fast-food giant
might follow in the footsteps of Dunkin' Donuts by selling bagged coffee under
its own famous brand.
The trademark registration, filed last month with the U.S. Patent
and Trademark Office, means McDonald's could be eyeing a spot next to Dunkin'
on grocery-store shelves. However, the trademark could also be designed merely
to prevent a competitor from using it for coffee.
Dunkin' Donuts, owned by Dunkin' Brands Inc., has reported
strong sales of its bagged coffees.
"We are always looking at new and exciting ways to remain
relevant to our customers and be where they need us to be," said Danya
Proud, a spokeswoman for McDonald's. "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 trademark filing was reported earlier by a trade website
called Burger Business.
Oak Brook, Ill.-based McDonald's has been expanding its coffee and
specialty-drink business since launching the "McCafé" menu about five
years ago—around the time McDonald's filed for trademarks for the
"McCafé" name. These "Frappes" and flavored coffees have
higher profit margins than much of the company's food menu, and have encouraged
customers to stop by more often throughout the day. Coffee represents more than
6% of McDonald's U.S. sales, up from 2% in 2004.
McDonald's has registered a number of trademarks for products that
have gone on to become menu items, including "Mac Snack Wrap," a beef
patty wrapped in a tortilla; "McDouble," a double burger with a slice
of cheese; the "McCruncher," a chicken sandwich the chain began
test-marketing in May, one month after filing for a trademark for the name; and
its failed "McDonald's Pizza."
Coffee consumption is rising in the U.S., the world's largest
importer of coffee beans, with 58% of Americans over the age of 18 drinking
coffee, up from 56% in 2010, according to a recent study by the National Coffee
Association, a trade group.
Packaged coffee is a roughly $5.6 billion business in the U.S.,
according to Starbucks Corp. That represents a
significant opportunity for McDonald's, if its customers are loyal enough to go
buy its brand in grocery stores, too. Starbucks recently took its
packaged-coffee business in house from Kraft Foods Group Inc. to capture
more of the profits, while Dunkin' still uses J.M. Smucker Co for its
distribution.
A study last April by market-research firm CustomersDNA LLC showed
that McDonald's coffee drinkers are more loyal than those who frequent
Starbucks and Dunkin' Donuts.
Despite the struggling U.S. economy, McDonald's has had a solid
sales growth over the past few years, but in recent months increases in
customer traffic 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—restaurants such as Panera Bread Co. that position themselves
a step above fast-food—are stealing customers from traditional drive-throughs.
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Write to Annie Gasparro at annie.gasparro@dowjones.com and
Julie Jargon at julie.jargon@wsj.com