Dive Brief:
- McDonald’s will expand its McCafe beverage lineup later this year following a “highly successful test” that exceeded expectations across over 500 U.S. restaurants, Jill McDonald, executive vice president and global chief restaurant experience officer, said Wednesday during an earnings call.
- New beverages “drove incremental occasions across different dayparts as well as higher average check, including strong results from our Red Bull collaboration, which we plan to continue building in both the U.S. and beyond,” she said.
- The company began testing various beverages inspired by its defunct CosMc’s concept last year, expanding to 500 restaurants last summer. McDonald said beverages represent a $100 billion global opportunity for the company.
Dive Insight:
Menu innovation is part of McDonald’s ongoing strategy — which also includes offering compelling value and marketing that resonates with guests — to help drive traffic and sales, CEO Chris Kempczinski said during the earnings call.
Last year, the chain brought back the Snack Wrap in the U.S., which saw strong performance. The debut of McWings in Australia and the introduction of the premium Big Arch burger across various global markets also performed well, he said. That burger contains two four-ounce patties with three slices of white cheddar cheese with onions, lettuce and pickles.
The McCrispy Sandwich is also gaining additional traction and the chain is testing various flavor combinations that could create additional recipes for customers to try, McDonald said.
For beverages, McDonald’s tested a range of items including indulgent coffees, refreshers energy drinks and crafted sodas, McDonald said, adding that crafted sodas, refreshers and energy drinks performed particularly well.
BTIG analyst Peter Saleh believes McDonald’s and its franchisees are investing in equipment that will prepare them for a spring or summer launch of the CosMc’s beverages, which could boost comps in the mid-single-digit range. The firm said franchisees also expect the Big Arch Burger to come to the U.S. in the near future.
McDonald’s also created a new menu category structure last year with dedicated leaders focused on beef, beverages and chicken to help create a better line of sight across these verticals and improve the overall experience of these items, McDonald said.
“We know that while value remains important for customers, delivering great taste and quality are their top needs, and that's at the center of everything we're doing across the restaurant experience,” McDonald said.
Other QSR chains, including Taco Bell, Chick-fil-A and Sonic, are expanding their menus with additional beverages and/or chicken innovation. Taco Bell, which continues to grow its chicken lineup, is growing its beverage-driven Live Mas Cafe concept and expects the beverage category to be a $5 billion sales driver for the chain by 2030.
