Coffee-to-go wars brew up profits
By Laura Petrecca
USA Today
Facing upscale coffee heat not just from Starbucks but from the likes of Dunkin' Donuts, 7-Eleven and ExxonMobil stores, fast-food giants are brewing up fancier java to compete.
Last week, Burger King launched its BK Joe — brewed 100 percent from premium arabica beans. Sold in decaf, regular and "turbo strength" (extra caffeine), the coffee will be in all of Burger King's more than 7,000 U.S. stores by the end of November.
BK Joe is aimed at giving the chain more profit from the nation's coffee-drinking trend. Eighty percent of Americans drink coffee — 53 percent every day vs. 49 percent in 2004 — reports the National Coffee Association.
Joining Burger King with better brews:
Beverages are important in the restaurant business as a typically low-maintenance, high-profit item. "Depending on how you price it, you can make 90 percent margins-plus," says Joe Pawlak, a consultant at industry tracker Technomic.
Quick-serve hot coffee sales in the United States this year are expected to be $11 billon, with about half at coffee shops such as Starbucks, Technomic says. Regular-coffee dollar sales are expected to grow 7 percent annually for the next three years, while specialty drinks — lattes and cappuccinos — are pegged to grow 15 percent annually.
But it's not Starbucks' customers Burger King is trying to win with BK Joe. It is looking to keep its customers from being lured away by the improved coffee of fast-food rivals, convenience stores and gas stations.
"Our customer isn't likely to wait in line at a Starbucks or coffeehouse," says Burger King chief concept officer Denny Marie Post. "They're going elsewhere for a consistent cup of coffee, (such as) gas stations and convenience stores."
Last October, ExxonMobil launched its Bengal Traders gourmet blends coffee line, available in more than 1,200 Tiger Mart stations.
