McDonald's has revealed that 2,500 of its restaurants in the US now serve McCafe branded coffee and the majority of its 14,000 sites will also stock it in the next year
It also expects the the new beverage program to eventually add $1 billion to annual sales.
Markets that are most penetrated include Kansas City, Missouri, as well as San Diego and Seattle -- Starbucks' home turf.
McDonald's and a host of other fast-food chains from Wendy's International Inc to Jack in the Box Inc and privately held Dunkin' Donuts are believed to be eyeing up thecoffee market and trying to steal share as Starbucks retrenches after an overly aggressive expansion.
McDonald's executives want to make the chain's restaurants a place where people go for drinks as well as food. The company is adding high-profit beverages in markets around the world.
Chief Operating Officer Ralph Alvarez said at an investor conference this week: "Beverages have higher margins than food. Obviously fountain drinks are the highest of those, but coffees, espresso-based coffees and bottled drinks will have higher margins than the food items.”
A second beverage wave set for mid-2009 through 2010 will add smoothies, frappes and bottle beverages, he added.
