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Buoyed by new ice frappes, McDonald's is expanding its cold beverage business to include smoothies. The iced frappes business, which debuted in March, is being credited in part with the fast feeders' 3.8-percent same-store sales boost in April, according to published reports.
While some predict the move is bound to fail, other industry watchers recognize the segment's growth potential. "How big is big?" asked Karen Wells, vice president of U.S. strategy and menu at McDonald's. "It's really big when you have $153 billion out there for the taking," she said in published reports, referencing the sum Americans spent on non-alcoholic beverages last year. "The sky is the limit."
The chain is planning a marketing campaign for the frappes and upcoming smoothies in July.
Morgan Stanley analyst John Glass said in reports the new strategy "is the biggest thing McDonald's has done since it rolled out breakfast."
At Deborah Virgiles' two McDonald's restaurants in Detroit, customers can sample smoothies in the store or at the drive-thru. Cashiers tell customers who are ordering value meals they can substitute a smoothie for their soft drink for an additional $1.29. Since the drinks rolled out in March, her stores are selling 1,400 weekly, according to published reports.