Visiting a grocery store or a gas station for a beverage these days can be an overwhelming experience. There are more energy drinks than we can count and cold coffee, of course. There are drinks with probiotics, a growing selection of kombucha, “detox” shots that look to us like small bottles of grass, and a bunch of things we’ve never heard of.
If you look closely, you can find the traditional soft drinks we grew up with.
All of which is mindful given McDonald’s big push into the beverage market, which was the subject of a Wall Street Journal piece last week, and its apparent impact on the brand’s relationship with Coke.
We don’t necessarily think there is much of anything wrong with that relationship, outside of the normal issues that come up over the years when a business evolves.
And there’s little question that McDonald’s, and many other brands, need to take their beverage offerings in a newer, more expanded direction.
McDonald’s, Taco Bell, and Chick-fil-A are all at some level working to provide a wider selection of drinks to consumers. Dunkin’ is working to market its existing offerings to convince more younger consumers to visit in the afternoons. Starbucks is promising to push even more innovation on matcha and Refreshers.
That is all five of the five largest restaurant chains in the U.S. But look throughout the industry and you see a lot of restaurant companies pushing more beverage innovation than they have in a long time. Whataburger is launching craft beverages. McAlister’s Deli is highlighting its tea selections more often. Even the pizza chain Little Caesars is working with Pepsi on an exclusive version of Mountain Dew.
This is not bandwagon jumping to add their names to a big, modern trend. This is a response to consumer demand for more types of beverages beyond what companies have been offering.
The median quick-service coffee chain grew system sales more than 10% last year on 6.3%-unit growth, even with the largest chain, Starbucks, pulling back over weak sales. This is coming despite a consumer frustrated by prices and burdened by inflation. And it’s despite a market that is seemingly loaded with coffee shops, more than 32,000 in fact.
That means that there is more demand than there are locations. Consumers want more and different beverage options.
And those coffee chains have themselves dramatically widened the selection of beverages they offer, moving well beyond the traditional drip coffee and espresso drinks to include more teas, boba teas, matcha, cold foams, add-ins, energy drinks, and whatever a Refresher is. All that has happened in the past decade or so.
The beverage companies have known this for years. The Coke booth at the National Restaurant Association Show in May featured a behind-the-counter machine to make dirty sodas, a wider selection of drink machines, both customer facing and employee-facing, and once more a huge selection of beverages of all kinds.
The growing selection of beverages at retailers is indicative of the shifting and evolving demands of consumers.
My kids will consider a much wider selection of drinks than I do. Catering to those consumers is crucial for restaurants, or any other business for that matter.
The one big thing restaurant chains need right now is customers. Chains have been getting by on higher prices and periodic marketing wins for years. Getting customers in by doing something they want, even if they are colorful beverages with weird names and exotic ingredients, is the right strategy.