Introduction to the World of Fun, Flavored Drinks
Fast-food chains have been leaning into innovative beverages in the hopes of winning over Gen Z customers. The trend is evident in the introduction of fun, fruity flavors by chains like Wendy’s, Taco Bell, and Chick-fil-A. Restaurants typically generate higher profits from beverages than from food sales.
- Fast-food chains have been leaning into innovative beverages in the hopes of winning over Gen Z customers.
- Wendy’s, Taco Bell and Chick-fil-A are among the chains that have been working on their drink offerings by introducing fun, fruity flavors.
- Restaurants typically generate higher profits from beverages than from food sales.
Fast-food chains are going all in on fun beverages to attract younger consumers. Chick-fil-A, known for its straightforward menu of fried chicken and waffle fries, is selling seasonal Pineapple Dragonfruit drinks. Yum Brands’ Taco Bell installed a beverage concept called Live Mas Café inside one of its California locations. McDonald’s is in its second year of testing its drinks-focused spinoff, CosMc’s.
The Rise of Beverage Innovation
Restaurant operators are betting that drinks with exotic flavors, bright colors, and high caffeine and sugar counts will mean higher sales — and better margins. Fast-food chains are increasingly adding beverage options and widening the number of items within that segment. Refreshers and agua frescas are increasingly showing up on menus, while fast-food chains expand their specialty iced coffee, hot chocolate, and energy drink options, according to market research firm Datassential.
Attracting Gen Z
Restaurants are hoping hot chocolate and flavored lemonades can help build loyalty with Gen Z consumers. Compared to previous generations, Gen Z is the most open to new flavors and comes from the most diverse backgrounds. Gen Z’s openness gives fast-food chains more latitude to explore more unusual offerings, such as butterfly pea or ube, according to Michael Parlapiano, managing director of the Culinary Edge, a consulting firm that has helped Noodles & Company, McDonald’s, and First Watch on menu offerings.
Chick-fil-A pineapple dragonfruit beverages.
Traditionally, large fast-food chains are less likely to experiment with such audacious flavors, but even they have stepped outside of their comfort zones. For example, Wendy’s current lemonade lineup includes blueberry pomegranate and pineapple mango — two choices that have paid off for the burger giant.
Beyond the Soda Fountain
For some chains, beverages have taken center stage as an area for improvement — and future sales growth. "We recognize that it’s not just about carbonated sodas anymore," El Pollo Loco CEO Liz Williams told CNBC. "So we did a deep dive in beverage innovation this year." El Pollo Loco’s expanded drink offerings now include more flavors of its Aguas Frescas, which are fruit-infused waters. Future drink innovation could mean following the mashup trend, such as selling horchata coffee, Williams said.
An exterior view of a Wendy’s fast-food restaurant in Bloomsburg, Pennsylvania, on May 19, 2024.
Wendy’s also wants more of its customers to order drinks. Roughly 30% of Wendy’s customers do not add a beverage to their order, according to a recent investor presentation. "This is an opportunity for growth when these are highly profitable," Wendy’s U.S. President Abigail Pringle told analysts.
The Profitability of Beverages
In many cases, beverages generate higher profits and are easier to add to menus than a new food item. While a customer sees a new flavor, for the workers making the drinks, it’s just swapping out a syrup flavor or adding a new drizzle on top. With just a little more labor, restaurants can charge a lot more. Plus, syrups also usually have longer expiration dates than food items and are easier to store, according to Datassential’s Claire Conaghan.
Taco Bell Chief Marketing Officer Taylor Montgomery reveals the second location of the Live Más Café.
Taco Bell focused on the future opportunity presented by beverages during its investor presentation earlier this month. "We believe that beverages can be a new core craving for Taco Bell, and we see a line of sight to building a $5 billion beverage business by 2030," Taylor Montgomery, Taco Bell’s North American chief marketing officer, said in an investor presentation earlier this month ahead of the brand’s Live Mas Live event.
Conclusion
Fast-food chains are increasingly focusing on beverage innovation to attract Gen Z customers and increase profits. With the rise of fun, flavored drinks, chains like Wendy’s, Taco Bell, and Chick-fil-A are experimenting with new flavors and concepts to stay ahead of the competition. As the trend continues, it will be interesting to see how these chains evolve and adapt to changing consumer preferences.
FAQs
Q: What is driving the trend of fast-food chains focusing on beverage innovation?
A: The trend is driven by the desire to attract Gen Z customers and increase profits, as beverages typically generate higher profits than food sales.
Q: What types of drinks are fast-food chains introducing to attract Gen Z customers?
A: Fast-food chains are introducing fun, flavored drinks with exotic flavors, bright colors, and high caffeine and sugar counts, such as refreshers, agua frescas, and specialty iced coffee and hot chocolate.
Q: How are fast-food chains using beverage innovation to increase profits?
A: Fast-food chains are using beverage innovation to increase profits by introducing new flavors and concepts, such as the Live Mas Café concept by Taco Bell, and by focusing on high-margin drinks like specialty coffee and hot chocolate.
Q: What is the potential for beverage sales growth in the fast-food industry?
A: According to Taco Bell’s chief marketing officer, the potential for beverage sales growth is significant, with the goal of building a $5 billion beverage business by 2030.
