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McDonald's Offers Free Coffee!

McDonald's
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Among fast-food restaurants the competition right now is fiercest over breakfast menus. To fight back against a threat from Taco Bell, McDonald’s Corp. (NYSE: MCD) is giving away free coffee during breakfast hours for two weeks beginning March 31.

Taco Bell, owned by Yum! Brands Inc. (NYSE: YUM), has rolled out a new breakfast menu and is promoting the new menu using real people named Ronald McDonald. Starbucks Corp. (NASDAQ: SBUX) expanded its breakfast sandwich menu earlier this month and added a new espresso beverage. Dunkin’ Brands Group Inc. (NASDAQ: DNKN) is also trying to carve out a niche in the breakfast market with a selection of food items targeting the health-conscious consumer.

McDonald’s is caught between its traditional role as the world’s largest seller of hamburgers and the competition over the fastest growing part of the fast-food business — breakfast. McDonald’s is already the leader in breakfast food sales among fast-food restaurants, and it cannot afford to let its lead evaporate.

The company’s coffee drinks were a big hit and contributed to the company’s growth before the slowdown hit about a year or so ago. Now the company will try to leverage that popularity in an effort to beef up its same-store sales.

McDonald’s efforts are complicated by the fact that it is not competing against its usual rivals like Taco Bell and Wendy’s Co. (NASDAQ: WEN), but coffee shops like Dunkin’ Donuts and Starbucks. Will McDonald’s mutate into a coffee shop? Not likely, but if this is where the growth is in the fast-food business then McDonald’s must compete hard even to maintain its position, to say nothing of promoting new growth.

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