SAN DIEGO —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
Negative first-quarter same-store sales at Jack in the Box, the first such downturn for the chain in more than four years, underscored to many observers the quick-service sector’s growing vulnerability. But the San Diego-based chain was quick to unveil some new elixirs designed to ease the pain. By July Jack in the Box will introduce systemwide Real Fruit Smoothies in three flavors: strawberry banana, mango and orange sunrise. The chain, operated and franchised by Jack in the Box Inc., also introduced earlier this month iced coffee and expanded its milk shake line to include a Kona Coffee flavor. —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
(To view charts featured in this week's print pages, click here.) —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
Management said early results from the 600 locations currently selling smoothies look good. —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
Jack in the Box, which operates or franchises 2,142 namesake restaurants, still is assuming a 2-percent dip in same-store sales for the current quarter, but admitted that it did not include any lift from the beverage offerings. The company expects a 0.4-percent rise in same-store sales for the year. —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
“We have seen an increase in premium-beverage activity in the quick-service space this spring and think that Jack in the Box’s new offerings should help the chain to compete and drive more traffic at nontraditional dayparts,” said Jeff Omohundro, a securities analyst at Wachovia Capital Markets LLC. —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
At McDonald’s, analysts predict a sales lift from beverage offerings—including 32-ounce sweet tea for $1,“value-sized” fountain beverage promotions and premium espresso-based coffees—to begin in the second half of this year. John Glass at Morgan Stanley said certain field checks had shown the new beverage offerings and promotions produced a 2-percent to 4-percent increase in sales, “with attractive margins” and prior to any national advertising support. —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
On May 15, Taco Bell introduced two flavors, strawberry and mango, to its Frutista Freeze beverage line. The suggested price is $1.89 for a 16-ounce cup, and the company said tests showed a sales lift during the afternoon daypart between 2 p.m. and 5 p.m. Analysts say the beverage line could prove particularly beneficial for Taco Bell, as the offerings would drive incremental sales in the afternoon snack daypart that Taco Bell has yet to really tap. —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
Sonic Inc., the Oklahoma City-based operator or franchisor of 3,400 locations, is considered a leader in beverage innovation and offerings, after tapping that menu segment ahead of its peers. Perhaps as a warning to others looking to introduce and discount beverages, Sonic’s management conceded earlier this month that its half-priced Happy Hour drink special increased traffic during the hours the special was offered, in some months by more than 20 percent, but at the expense of other, more lucrative dayparts, such as lunch and dinner. —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
Analysts say this summer could prove a difficult one for Sonic as beverage competition heats up. To counter the lower check averages, Sonic said it has instructed employees to suggestively up-sell beverages with snack items like its mac and cheese bites, cheesecake bites, or cinnamon snacks. Sonic most recently downgraded its earnings expectations because of weaker-than-expected sales. —As the stalling economy begins to affect even the previously resistant quick-service segment, a growing number of fast feeders are turning to high-margin beverages to quench their thirst for customers and sales.
