Fast-food restaurants spruce up coffee

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.

Today, Burger King will officially launch its BK Joe — brewed 100% 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 craze. Eighty percent of Americans drink coffee — 53% every day vs. 49% in 2004 — reports the National Coffee Association.

Adding up on java

Projections for coffee and specialty drinks sold in fast-food restaurants:
2005 sales (in billions)
Annual growth rates, 2006-09
Hot coffee $7 - 7%
Lattes, mochas, cappuccinos and espressos $4 - 15%Lo
Total $11 - 10.5%
Source: Technomic

Joining Burger King with better brews to go after those drinkers:

•McDonald's tested a premium roast and plans a national rollout soon.
•Chick-fil-A added a Cafe Blends line this summer.
•Subway is trying gourmet java in some stores to lure morning traffic.

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% margins-plus," says Joe Pawlak, a consultant at industry tracker Technomic.

Quick-serve hot coffee sales in the USA 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% annually for the next three years, while specialty drinks — lattes and cappuccinos — are pegged to grow 15% annually.
But it's not Starbucks' customers that Burger King is trying to win. It is looking, with BK Joe, to keep its coffee-loving customers from being lured away by the improved quick cups of joe being rolled out by fast-food rivals, as well as 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 coffee line. The gourmet blends are available in more than 1,200 Tiger Mart stations. While ExxonMobil would not disclose sales, "We're encouraged by our first year," says Russ Ritenour, manager for dispensed beverages.

Even as Burger King ups its coffee offerings, the competition continues to improve brews, too.

On Monday, 7-Eleven will announce the addition of a World Roasts gourmet line to its already upgraded selections.