McDonald’s Drinks in Beverage Business
Fast Food retailer McDonald’s is continuing the menu tinkering it began in 2008 by expanding and experimenting with its fountain drink offerings. According to Bloomberg, McDonald’s is replacing the Pibb Xtra fountain beverage from Coca-Cola with Dr. Pepper from Dr. Pepper Snapple at all 14,000 U.S. restaurant locations.
A McDonald’s executive was quoted as saying the retailer seeks to become a “beverage destination” for consumers. Last year, McDonald’s and Wal-Mart were the only companies listed on the Dow Jones 500 to have their stock values rise. McDonald’s attributed part of its 2008 success to new menu items, including the introduction of premium coffee beverages. McDonald’s reported a 70% lift in coffee sales as a result of the coffee upgrade.
During 2009, McDonald’s plans to expand its assortment of fountain and bottled beverages to drive beverage sales beyond the morning, when most coffee is sold. Select McDonald’s locations will be able to sell diet Dr. Pepper, and the retailer also intends to pilot sales of Coca-Cola Zero later this year.
In Canada, McDonald’s recently ran a two-day promotion of a snack-sized tortilla version of its signature Big Mac sandwich. McDonald’s is also currently running a free premium coffee promotion in Canadian locations.
McDonald’s chief fast food rival Burger King is also busy this year experimenting with new menu items and store design elements. Burger King is testing more than 45 new menu items, including non-traditional items such as a grilled salmon sandwich and a steak kabob. In addition, Burger King is piloting a new Whopper Bar café-style restaurant concept and an urban-themed interactive restaurant concept called Burger King Studio.
During Q1 2009, McDonald’s consolidated comparable store sales and net income increased, although the retailer said the negative impact of foreign currency exchange rates dampened consolidated revenue and operating income for the quarter.