Filed under: Products and services, Starbucks (SBUX), McDonald’s (MCD), Wendy’s Intl (WEN), Burger King Hldgs (BKC)

McDonald’s (NYSE: MCD) has always been known for its famous French fries. Interestingly enough, though, it seems to me that the fast-food chain is becoming known these days for its coffee. I never thought McDonald’s would invest as much as it has in coffee, but it looks like it’s doing the right thing. According to this Bizjournals piece, McDonald’s is putting its weight behind a coffee-bar initiative called McCafe. The program is being tested in various locations now and will be available nationally sometime next year.

I love the timing on this. After all, Starbucks (NASDAQ: SBUX) isn’t doing so well. Not only is its stock hovering around 52-week-low territory, but the java king recently announced some store closings. That’s nearly unimaginable. Remember the days when each street corner needed a Starbucks? Yeah, those days are long gone. And I think McDonald’s is smart in attempting to expand the brand equity of its coffee-brand portfolio. People need more of a reason to go to the palace of the hamburger-serving clown than just Large Macs these days, since the Huge Mac and its various fat-saturated colleagues aren’t as popular in these health-conscious times. I’m not saying drinking coffee is an exercise in life preservation, I’m just saying that it’s good for McDonald’s to focus on less controversial fare.

This significant foray into coffee is arguably a key reason for the company’s stellar stock performance over the last few years and its competitive edge against rivals Burger King (NYSE: BKC) and Wendy’s (NYSE: WEN). According to the AOL Finance snapshot, McDonald’s is very much in the green for each timeframe save for year-to-date, which sees the stock down less than 1%. That’s strength. McDonald’s is a tiny below its 52-week high, and it might make for an interesting investment idea. At the very least, you can look forward to its McCafe program.

Disclosure: I don’t own any company mentioned; positions can change at any time.

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This entry was posted on Wednesday, July 9th, 2008 at 6:50 pm and is filed under Products and Services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.