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McDonald's Coffee Sales Drop While Frappes Sales Soar

The quick-service chain has seen sales of hot coffee beverages drop by close to half, while its new cold frappes are selling at a fast clip.
June 16, 2010

OAK BROOK, Ill. - McDonald��s has seen its hot coffee sales plummet but sales of its new cold frappe drinks are climbing, Crain��s Chicago Business reports. Sales of coffee beverages dropped from around 55 daily per restaurant when launched last May to approximately 25 daily per restaurant this month.

However, McDonald��s new cold frappes have been flying out the door at a clip of more than 80 daily per restaurant. The publicity surrounding the frappes could propel U.S. summer sales at the fast-food chain. McDonald��s will start heavy promotion of the slushy beverages. Also coming up is the national launch of smoothies.

But the decline in hot coffee drinks could spell trouble for the restaurant in the long term. "The McDonald��s customer may not be a latte or cappuccino drinker," said Larry Miller, an analyst at RBC Capital Markets. "It makes sense that frappes would do better because they are basically coffee shakes, and McDonald��s customers like shakes."

McDonald��s leadership seemed to be counting on specialty coffees, frappes and smoothies to capture repeat customers. McDonald��s CEO James Skinner said the drinks would contribute more than $1 billion to the company��s annual sales.

Internally, McDonald��s has a goal of selling about 75 hot coffee beverages each day at each restaurant. "McCafé is doing very well, as evidenced by the nearly 40 percent sales increase in our coffee business since introducing the new line of espresso-based beverages in 2009," said a company spokeswoman.