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McDonald's Testing Coffee Concept

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By Scott Hume





CHICAGO--Determined to broaden its appeal to adults, McDonald's Corp. is testing a branded coffee-bar concept called Company Joe Coffees & Bakery.





A prototype unit is operating in Woodridge, Ill., west of Chicago and close to the fast-food chain's headquarters in Oak Brook, Ill. It is part of a complex that includes a Thornton gasoline station and convenience store, and a McDonald's restaurant.





A McDonald's representative confirmed it is testing viability of the Company Joe coffee concept in Woodridge and a site in Ohio, but offered no other details. Sources close to the company said the chain already plans to open additional Company Joe locations at similar restaurant/gasoline/minimart complexes.





With only two locations, Company Joe is 1,112 behind the number of company stores Seattle-based Starbucks Corp. operates, but that company's success has been a spur for the test, said insiders.





'The coffee market is booming, and McDonald's would like to have a piece of it,' said one source familiar with the test. 'Couple that with the need for more (features) that are attractive to adults, and you have Company Joe.' McDonald's launched the Arch Deluxe sandwich line last year to add adult traffic.





The Woodridge Company Joe unit has its own logo and signage. It offers regular and flavored coffees (Premium Joe, Decaf Joe, Hazelnut Joe, etc.) priced at 79 cents to 99 cents. A selection of wrapped baked goods also is available. Purchases at the unmanned coffee bar can be paid for at either the McDonald's or the Thornton minimart.





The Company Joe test has received no advertising support, but sources said the concept falls in the domain of DDB Needham Chicago, which handles marketing for McDonald's non-traditional sites.





Alternatives to full-size, stand-alone McDonald's restaurants have become a major source of expansion for the chain. It opened 542 traditional units and 184 downsized 'satellite' locations in 1996, according to its annual report.











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