Fast-food joints jazz up drink menus for summer

Upscale offerings are on the docket for every major chain, indicating an industry-wide effort to improve margins.

By InvestorPlace May 3, 2011 10:31AM

McDonald's (MCD) has changed the fast-food industry in many ways since its first franchise location opened more than 50 years ago. One of its 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 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 (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 anymore.
  • Wendy's (WEN) sister restaurant Arby's is rolling out a Jamocha Oreo Shake in May. It's a twist on the current coffee drink with added 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 (SBUX) knows its niche, however, and is bringing back its Mocha Coconut Frappuccino (starting today!) for a limited time.
  • 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.

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May 4, 2011 1:48PM
Cold Stone has had the Cake 'n' Shake for years.....
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