McDonald's To Test New Coca-Cola Fountain Next Year

McDonald's Corp. (MCD) will soon start testing Coca-Cola Co.'s (KO) new fountain-drink dispenser that can pour more than 100 different versions from a single machine.

The fast-food chain will test the machine, called Freestyle, in some U.S. restaurants starting next year, according to Karen Wells, McDonald's vice president of menu and strategy.

"We're very optimistic about the future of beverage innovation at McDonald's and this includes the area of technology," Wells told Dow Jones Newswires Wednesday. "We are working hard to become our customers' preferred beverage destination."

McDonald's is in the midst of making a bigger push into the beverage business, with specialty coffee added across the U.S. and plans to launch frappes and smoothies next summer.

One area where McDonald's will likely focus during the test will be on how the machine affects service times in an industry intent on speed of service.

In McDonald's, Coca-Cola signs up its largest foodservice customer to try out a machine in development for four years.

This summer, Coca-Cola began adding the Freestyle to what is now a test group of 53 restaurants in the Atlanta and Southern California markets, including select units of McDonald's top hamburger rivals Burger King Holdings Inc. (BKC) and Wendy's, of Wendy's/Arby's Group Inc. (WEN). Other chains with stores testing the machine are Jack in the Box Inc. (JACK) and P.F. Chang's China Bistro Inc.'s (PFCB) Pei Wei concept.

The Freestyle machine uses small cartridges of highly-concentrated beverages, as opposed to large bags of syrup used in traditional machines, which usually have up to 12 flavors. The cartridges are also designed to be easier to replace than the bags, and their smaller sizes can keep shipping costs down.

The current model is designed for self-service, but Coca-Cola is working on a version suitable for fast-food crews.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; [e-mail]