Summer drinks stir up easy profits
Fast-food chains lure customers with cool and sometimes crazy drinks.
As the country wilts under summer heat, the nation’s largest fast-food chains are increasingly rolling out ever-more elaborate — sometimes outright crazy — drinks both to drive profits and draw attention.
These hand-crafted beverages bring in customers who want to quench their thirst, try something new or snap a photo to post on social media. Something chilled and sweet and often creamy is enough to make anyone nostalgic for childhood summers. And they’re a relative inexpensive pleasure, though the markup is high enough that the chains adore the easy profits in an era of struggling sales.
From Starbucks to McDonald’s to Panera, more and more chains are rounding out their menus with these drinks — cool in both temperature and style.
Some are part of restaurants’ year-round rosters, while others are as fleeting as a summer rain shower, They’re named for the make-believe (unicorn, Lucky Charms), Mother Nature’s offerings (shamrock, liger) or ingredients (frozen coffee, matcha lemonade).
For restaurants, they’re a lure for customers at a time when the industry trying to overcome declining foot traffic and customer loyalty and an evermore competitive landscape; the overall chain restaurant industry hasn’t had a
month of positive sales since February 2016, according to TDn2K, an industry analytics firm based in Dallas. For customers, the treats are a novelty, but they also carry risks.
Like anything packed with lots of sugar, calories and food coloring, consuming too much can lead to weight gain and other health problems.
For beverage-centric chains, like Dunkin’ Donuts and Starbucks, these drinks are a way to inspire customers to branch into baked goods. For more traditional chains, like Panera or Arby’s, they’re a way to add to the tabs of customers who come in for something other than a drink, said John Gordon, restaurant analyst with Pacific Management Consulting Group. In all cases, a limited-time offer draws anyone who wants to try a now-or-never beverage.
Mitch Cooper is a big fan of cool drinks, and he’s usually the first among his friends to head out and sample them. If he’s really gaga over a new one, he’ll talk about it on social media.
“I love those things,” said the 29-year-old marketing specialist from Stow, Ohio. “If I try it and I like it, I’ll definitely get it again.”
Regardless of what pulls in customers, the markups are huge. The margins for these often highsugar, high-calorie drinks can be as high as 80% to 90%, Gordon said. Beverages are 20% to 25% of the average order.
“Their motive is to decrease the amount of customers who only get water when they come in,” Gordon said, noting that soda sales in the United States have plummeted over the past several years.
“To the degree they can invent a new drink, they have the potential (to motivate) a water consumer to go to a $1.95 blended drink.”
If the drinks are unique or shticky enough, they’ll explode on social media, where they’ll get much bigger promotion than they would through traditional advertising; customers will try one and post photos to show how hip they are to the latest food trends. While that is true of almost every demographics, the most soughtoffer segment, Millennials, are particularly predisposed to do this. These hand-crafted beverages are usually photogenic — due to an unusual color or a whipped cream crown, say — which also ups their play on Instagram, Twitter and Facebook.
And if the drink is offered for a limited time, expect posting to jump up exponentially.
Currently, the hot cool drink is Burger King ’s Lucky Charms shake, which came out this month and is made from the children’s cereal. It was inspired by the popularity of the chain’s other breakfast-inspired shake, the Froot Loops shake, which it offered in April.
The “magically delicious” version is available for eight weeks, though Alex Macedo, president of Burger King North America, said the drink is proving so popular that they might run out “much sooner.”
That doesn’t mean Burger King OKs every shake it dreams up; the s’mores one, for example, wasn’t green-lighted because it was “commonplace.”
“There’s a growing need for interesting ideas that people can’t readily make by themselves, and the more creative you are, the more successful you’ll be in attracting people to your restaurants,” he said.
Macedo explained that these drinks have high margins and that 30% to 40% of people walk into a Burger King specifically to get them.
Arby’s also grabbed some attention in June with its Liger Shake, a lion and tiger hybrid mix popularized by the movie Napoleon Dynamite.
The orange-with-brown-striped beverage isn’t the chain’s first foray into specialty drinks; its Jamocha shake was introduced 50 years ago. Today, shakes make up nearly 6% of the Arby’s sales mix, according to the company.
“They’re conversation pieces, and they’re also nods to cultural happenings,” explained Neville Craw, Arby’s brand executive chef.
Other chains riding the wave of new drinks include McDonald’s, with its Chocolate Shamrock Shake, inspired by its popular seasonal Shamrock Shake; Dunkin Donuts, with its Frozen Dunkin Coffee, a coffee-based drink that replaced the water-based Coffee Coolatta; and Panera, with a new line of fruit and tea drinks made with artificial preservatives, sweeteners, flavors or colors.
Starbucks’ Unicorn Frappuccino was a blockbuster in April, spawning a rush to the stores, lots of social media chatter and plenty of non-social-media think pieces.
Imbibing these calorie- and sugar-packed drinks too often could cause customers’ waistlines to expand as their wallets shrink.
A person taking in an extra 100 calories a day can add 10 pounds of weight a year — and most of these drinks have high calorie counts, like the Lucky Charms shake with 740 and 107 grams of sugar. Or the Chocolate Shamrock Shake with 510 calories and 70 grams of sugar for a small.
“Americans, in general, consume too much sugar, and sugarsweetened beverages are a big culprit,” said Mitzi Dulan, a Kansas-based registered dietitian. “Good old water is free, and sugar free,” she added. “A twice-a-year indulgence or once a month? That’d be fine,” she said.
“When you’re getting into the daily habit or even several times a week, it’s just adding calories, and it can make people really struggle to maintain their weight.”
Cooper, the marketing specialist, estimates that he buys one or two of these drinks a week, spending about $10.
“They’re not something I can easily justify buying every day. It’s definitely something if my wife and I are going out, we’ll swing by and grab a drink like that,” he said.
“They’re conversation pieces, and they’re also nods to cultural happenings.” Neville Craw, Arby’s brand executive chef