The Next Restaurant Battle Is Bigger Than Food: McDonald’s, Red Bull and the Fight for Consumer Occasions

 

McDonald’s is getting into the energy-drink business with Red Bull, but from my perspective as the Grocerant Guru®, the bigger story is not caffeine.

The bigger story is consumer evolution.

Consumers are no longer willing to define a restaurant visit by the traditional three meals a day, a limited beverage menu and a single transaction. They want more choices, more convenience, more portability and more reasons to visit—or order—from the brands they already know.

Restaurants that evolve with those expectations can create new revenue streams.

Those that don't risk losing customers to competitors, convenience stores, coffee chains, grocery stores and increasingly sophisticated foodservice retailers that are willing to give consumers exactly what they want.

McDonald's is betting that Red Bull can help open another door.

Beginning August 17, participating McDonald's restaurants will offer the Red Bull Dragonberry Energizer, combining Red Bull with raspberry syrup and freeze-dried dragonfruit. Customers looking to reduce calories can substitute Red Bull Zero, and participating restaurants will also sell an 8.4-ounce can of Red Bull.

McDonald's is simultaneously expanding its "dirty soda" strategy with the Vanilla Swirl, which combines Coke, Diet Coke or Coke Zero with vanilla and cold foam.

That may sound like two beverage launches.

I see something much bigger.

McDonald's Is Expanding the Day, Not Just the Menu

The restaurant industry has historically thought about dayparts in fairly rigid terms:

Breakfast. Lunch. Snack. Dinner. Late night.

Today's consumer does not.

An afternoon customer may want an energy drink rather than coffee. A teenager may want a customized dirty soda. A parent may want a meal and an energy drink for the road. A worker may want something cold and caffeinated at 3 p.m. without sitting down for another traditional meal.

That creates an enormous opportunity for restaurant chains.

Energy drinks are particularly interesting because the category has experienced significant growth at retail since 2020, with sugar-free products helping drive the expansion. Consumers increasingly view energy drinks as an alternative to coffee, and afternoon consumption gives restaurants an opportunity to create a new occasion between lunch and dinner.

That is precisely where daypart expansion becomes strategically important.

McDonald's isn't simply selling another beverage.

It is attempting to create another reason to visit McDonald's.

CPG Is Becoming Restaurant Foodservice's New Frontier

The other important piece of this strategy is the blending of CPG and restaurant foodservice.

For years, the restaurant industry largely separated itself from packaged consumer products.

Restaurants sold prepared food.

Grocery stores and convenience stores sold packaged food and beverages.

That distinction is rapidly disappearing.

Today, restaurant consumers increasingly expect recognizable CPG brands inside restaurants—and restaurants are increasingly recognizing that CPG partnerships can provide credibility, variety and incremental occasions.

Red Bull is an especially powerful example because McDonald's doesn't have to convince consumers what Red Bull is.

The consumer already knows.

That dramatically lowers the educational burden.

The restaurant gets the traffic opportunity while the CPG brand gets another distribution channel.

That is a powerful symbiotic relationship.

McDonald's Needs More Than Traffic—It Needs More Transactions and Bigger Baskets

The timing is also important.

McDonald's reported only 0.8% same-store sales growth in the second quarter, despite beverage initiatives and marketing promotions, while restaurant traffic remained weak.

That makes this beverage expansion more than a menu experiment.

It is an attempt to create incremental demand.

And that is exactly how restaurant executives should be thinking.

The question shouldn't simply be:

"What new food should we add?"

The better questions are:

What new occasion can we own?

What existing customer need can we satisfy?

What product can bring a customer into the restaurant who might not otherwise come?

What product can increase the average check without substantially increasing labor or complexity?

Those are very different questions.

The Drive-Thru May Be the Most Important Asset in This Strategy

There is another opportunity hiding in plain sight.

The drive-thru isn't simply a faster restaurant entrance.

It is a high-speed distribution platform.

Most chains continue to think about the drive-thru as a way to fulfill one order at a time.

The Grocerant Guru® sees an opportunity to think much bigger:

How many meals can one vehicle deliver?

A consumer picking up dinner for a family could potentially leave with meals for four people, an afternoon snack for tomorrow, beverages for the car and packaged products for later.

That turns the drive-thru from a transaction point into a mini foodservice distribution center.

And CPG partnerships can help make that possible.

Imagine ordering a family meal and adding an energy drink, packaged dessert, snack, bottled beverage or another ready-to-eat item for later.

The restaurant has just expanded the transaction beyond the immediate meal.

That is daypart expansion, basket expansion and channel expansion happening simultaneously.

Three Drive-Thru Ideations From the Grocerant Guru®

1. The "Add One More" Drive-Thru

Build the ordering experience around one simple question:

"What else do you need for later?"

At the speaker, app or kiosk, customers could receive highly targeted add-ons based on the order and time of day.

Breakfast could trigger an afternoon beverage.

Lunch could trigger a snack.

Dinner could trigger tomorrow's breakfast.

A family meal could trigger additional beverages or desserts.

The goal isn't to push more food.

The goal is to anticipate the next consumption occasion.

2. Multi-Meal Drive-Thru Bundles

Restaurants should create bundles specifically designed for customers picking up food for multiple people or multiple occasions.

For example:

Tonight's Dinner + Tomorrow's Breakfast + Road Beverages

The customer orders once and receives multiple consumption occasions in one drive-thru transaction.

That could increase average check while requiring relatively little incremental selling effort.

It also gives restaurants an opportunity to compete more directly with grocery stores and convenience stores for the consumer's next meal.

3. The Drive-Thru "Grab-and-Go Market"

The final opportunity is to turn part of the drive-thru experience into a miniature CPG marketplace.

Imagine a designated pickup area containing high-margin, highly portable products that customers can add to their order:

·       Energy drinks

·       Bottled beverages

·       Packaged snacks

·       Desserts

·       Breakfast items

·       Family-size add-ons

·       Ready-to-eat products

·       Limited-time CPG collaborations

The restaurant doesn't have to become a grocery store.

It simply needs to recognize that the consumer's need doesn't end when today's meal is consumed.

The Grocerant Guru® Bottom Line

McDonald's move with Red Bull is about much more than energy drinks.

It is another signal that the restaurant industry is becoming increasingly channel-blurred, daypart-blurred and occasion-blurred.

Consumers don't think in restaurant categories.

They think in needs, occasions, convenience, value and experiences.

The winning restaurant chains will increasingly look outside their traditional menus for ways to satisfy those needs.

CPG partnerships can provide restaurants with recognizable brands, incremental occasions and potentially attractive margins without requiring the restaurant to invent every product itself.

And the drive-thru may ultimately become one of the industry's most underutilized assets.

The restaurant industry spent decades teaching consumers that the drive-thru was the fastest way to get one meal.

The next generation of restaurant operators should be asking how to make it the fastest way to get several meals, beverages and consumption occasions at once.

That is where the real growth opportunity may be.

The consumer is evolving.

Restaurant chains must evolve with them—or risk watching those customers evolve right out of their brand.

Three Grocerant Guru® Takeaways

1. Own more occasions.
Don't just compete for breakfast, lunch and dinner. Build products and partnerships that create afternoon, snack, beverage and "for later" occasions.

2. Use CPG to expand the menu without reinventing the kitchen.
Strategic CPG partnerships can add recognizable products, new consumption occasions and incremental revenue while potentially limiting operational complexity.

3. Turn the drive-thru into a multi-meal distribution channel.
The next evolution of the drive-thru isn't necessarily serving more cars faster. It is serving more consumption occasions per car. The brands that learn how to put multiple meals and occasions into a single transaction could discover a powerful new source of top-line sales and bottom-line profit.

Are you ready for some fresh ideations? Do your food marketing ideas look more like yesterday than tomorrow? Interested in learning how our Grocerant Guru® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit: us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter