McDonald’s has announced that it will start selling ground coffee in major Canadian stores in November, stepping up its competition with rivals such as Starbucks and Dunkin Donuts. The proposed coffee will be priced at $6.99 per 340 grams. McDonald’s Canadian president John Betts sees the coffee business as a huge opportunity to rebound from its worst quarterly sales growth recently as McDonald’s restaurants have been exponentially growing for the last seven to eight years, and will continue to increase next year. Betts also said that too many stores were built too quickly in Canada, but the coffee business has been a major anchor of support to McDonald’s.
As McDonald’s expands its target market to sell coffee, it is also making itself more vulnerable to competitors such as Tim Horton’s and other fast-food coffee shops. Tim Horton’s, a company that has also launched into the coffee business, is expanding its lunch menu, therefore also expanding its target market like McDonald’s is. McDonald’s proposition to sell ground coffee is not a bad idea, however, it should stay aware of the threats of competing for too broad of a target market as it is introducing a new line of product rather than a new variation of a product.
Article Link: http://ca.reuters.com/article/businessNews/idCABRE89O19C20121025?pageNumber=2&virtualBrandChannel=0&sp=true