Fast Food Is Hungry for Sales.The Latest Play: Beverages

(Illustration by Elias Stein)

As price hikes, tariffs, and health-conscious consumers weigh on sales, fast-food chains are turning to beverages. Compared with food, drinks are easy to make and have higher profit margins. Many customers skip drinks when ordering meals, so new flavors and attractive visuals may fuel purchases. And drinks can draw traffic throughout the day.

McDonald’s recently announced plans to test cold coffees, fruity refreshers, craft sodas, and energy drinks at some 500 U.S. restaurants, starting in September. “We’re seeing real momentum in beverages, with more people—especially our Gen Z fans—turning to cold, flavorful drinks as a go-to treat,” says Alyssa Buetikofer, McDonald’s U.S. head of customer experience and marketing.

Created with Highcharts 9.0.1In Need of a BoostNone of the stocks of the big fast-food chains have fared that well in 2025.Source: FactSet

Created with Highcharts 9.0.1Yum! BrandsMcDonald’sRestaurant Brands InternationalWendy’s2025Aug.-50-40-30-20-100102030%

In December, Yum! Brands’ Taco Bell launched a “Live Mas Café” inside a California store, offering over 30 beverages. Six months later, Taco Bell said store sales rose 40% and that it plans to launch 30 more cafes by year end. This summer, Wendy’s introduced cold brew with foam and fruity energy drinks. And Restaurant Brands’ Burger King said it was adding lemonades and iced coffee.

Created with Highcharts 9.0.1Sticker ShockGrowth in spending on fast food last year was slower than any year since the​pandemic. One reason: higher prices.Consumer SpendingSource: Statista

Created with Highcharts 9.0.12017'18'19'20'21'22'23'24050100150200250300350$400 billion

The strategy isn’t foolproof. Sales can sag as viral buzz fades. Budget-conscious buyers may cut drinks first. And too much variation can slow service, cause worker stress, and distract food customers. On the bright side, BTIG analyst Peter Saleh notes that when McDonald’s relaunched McCafé a decade ago, it lifted sales for everyone.

Write to Evie Liu at evie.liu@barrons.com

Last Week

Markets

Oil sank in the run-up to U.S. and Russia talks on Ukraine in Alaska. President Donald Trump named the Heritage Foundation’s E.J. Atoni to run the Bureau of Labor Statistics, sparking a backlash. Stocks opened down after the U.S. and China extended trade talks by 90 days and Trump agreed not to impose tariffs on gold bullion. Consumer inflation beat expectations, feeding rate-cut hopes; the S&P 500, Nasdaq Composite, and Bitcoin hit highs. But producer prices came in hot, pausing the rally, and consumer sentiment fell. On the week, the Dow Jones Industrial Average rose 1.74%, missing a record, the S&P 0.94%, and the Nasdaq Composite 0.81%.

Companies

Nvidia and Advanced Micro Devices agreed to pay the U.S. 15% on advanced China chip sales to receive export licenses; Beijing told its tech groups to justify buying U.S. chips. Trump reversed his opinion of Intel CEO Lip-Bu Tan after they met. Now the White House is interested in buying a stake. Elon Musk threatened to sue Apple, claiming its App Store favored OpenAI’s ChatGPT. OpenAI may back a start-up, Merge Labs, to compete with Musk’s Neuralink. Trump said Goldman Sachs CEO David Solomon should get a new top economist over a “bad prediction.”

Deals

tate-owned China CSSC Holdings and China Shipbuilding Industry closed their $16 billion merger, creating the world’s biggest shipbuilder…Artificial-intelligence start-up Perplexity offered to buy Alphabet’s Chrome browser for $34.5 billion in cash.

Next Week

Tuesday 8/19

Retailers take center stage, as some of the largest merchants report earnings. Home Depot releases results on Tuesday, followed by Lowe’s, Target, and TJX Cos. on Wednesday. Walmart announces earnings on Thursday, along with Ross Stores.

Wednesday 8/20

The Federal Open Market Committee releases the minutes from its late-July monetary-policy meeting. At that meeting, the FOMC kept the federal-funds rate unchanged at 4.25%-4.50%.

Thursday 8/21

S&P Global releases both its Manufacturing and Services Purchasing Managers’ Indexes for August. Consensus estimates are for a 49.9 reading for the Manufacturing PMI and 53.4 for the Services PMI. This compares with readings of 49.8 and 55.7, respectively, in July.

Friday 8/22

Federal Reserve Chair Jerome Powell speaks at the Federal Reserve Bank of Kansas City’s Economic Policy Symposium in Jackson Hole, Wyo. The theme of this year’s confab, which runs from Thursday through Saturday, is “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.”

The Numbers

$1.1 T

The forecast for 2025 stock buybacks by U.S. companies, which would be a high going back to 1982.

$11 B

How much SoftBank’s Masayoshi Son added to his fortune in August’s first two weeks. The reason: AI.

54%

Share of Americans who told Gallup they consume alcohol, a 90-year low. GOP drinkers fell to 46%.

1.01 M

Number of containers processed by the Port of Los Angeles in July, a record, beating May 2021.

Write to Robert Teitelman at bob.teitelman@dowjones.com