7 Summer Drink Creations That Could Juice Fast Food Stock Margins
by InvestorPlace Staff | May 4, 2011 5:46 am
McDonald’s (NYSE: MCD) has changed the fast food industry in many ways since its first franchised location opened over 50 years ago. And one of it’s most recent contributions is the idea that a burger joint can be a specialty drink powerhouse, too. A 2008 study showed that Mickey D’s stores offering premium McCafe coffees generated 15% more revenue than a standard location.
So it’s no surprise that every fast food joint under the sun is trying to get in on the beverage biz. Specialty drinks are a high-margin business and are an easy way to experiment with creative new flavors to reach new customers.
The summer heat is a perfect occasion for testing these thirst quenchers, and a laundry list of quick-service restaurants are rolling out drinks that include a Double Stuff Oreo shake, frozen strawberry lemonade and new zero-calorie sodas. Here are some of the highlights:
- Starting in June, 7-Eleven will reinvent its iconic Slurpee by rolling out cups with dual chambers, a high-tech valve and two straws that let you drink one or two Slurpee flavors at a time.Why choose between Bruisin Berry or Sour Green when you can have both?
- In May, McDonald’s is rolling out frozen strawberry lemonade as its latest McCafe specialty drink. This comes after a previous summer launch of a new McDonald’s smoothie menu.
- Drive-in chain Sonic (NASDAQ: SONC) has plans in May for a shake dubbed Double Stuff Oreo Blast. As you’ll see, it looks like plain old Oreo shakes just don’t cut it any more.
- Wendy’s (NYSE: WEN) sister restaurant Arby’s is rolling out a Jamocha Oreo Shake in May. It’s a twist on the current coffee drink by adding chocolate cookies. Yum.
- And while Arby’s moves into coffee, Dunkin’ Donuts is moving the other direction — into soft drinks. DD will roll out a Mountain Dew Coolatta, a frozen slush drink.
- Starbucks (NASDAQ: SBUX) knows its niche, however, and is bringing back its Mocha Coconut Frappuccino (starting today!) for a limited time. It’s amazing how many different ways you can flavor coffee, isn’t it?
- In mid-June, Cold Stone Creamery will debut a Cake ‘n Shake premium drink made with cake-batter ice cream and yellow cake pieces. Who says you can’t have your cake and drink it too?
All of these drinks probably won’t come cheap — and that’s the idea. As fast-food restaurants look to boost margins amid food price inflation, premium specialty beverages are the simplest way to “juice” the numbers.
As for who will win the summer drink wars, only time will tell. But it sure will be a treat to test all these new offerings for yourself in the months ahead.
- MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
- SONC: http://studio-5.financialcontent.com/investplace/quote?Symbol=SONC
- WEN: http://studio-5.financialcontent.com/investplace/quote?Symbol=WEN
- SBUX: http://studio-5.financialcontent.com/investplace/quote?Symbol=SBUX
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