McDonald's wants to sell more drinks. Why is this important to investors?

McDonald's will revamp the beverage lineup at its restaurants in the U.S., The Wall Street Journal reports, citing internal documents and sources. In May, the menu will include new soft drinks and soda-based cocktails - in particular, Dirty Dr Pepper. McDonald's will start selling energy drinks in August, the newspaper said.

"Our fans' love for McDonald's beverages is very strong. Next month, we will build on that interest by unveiling a new era of beverages," the company confirmed.

Fast-food chains are increasingly looking to beverages as a major source of revenue growth, rather than just a complement to food, writes Barron's. McDonald's is not alone in this: in recent years, Burger King, Wendy's and Taco Bell have also expanded their beverage offerings by adding energy drinks and other soft drinks with unusual flavors and additives to their menus, the publication notes.

Meanwhile, the core fast food business remains under pressure. Over the past two years, restaurant prices have risen significantly, and many consumers have become more cost-conscious and health-conscious, eating at home more often. At the same time, establishments have faced rising costs - everything from labor to ingredients has become more expensive - which has a negative impact on profitability.

The drinks are seen as a good way to win back customers and increase profits, Barron's notes: they have higher margins, are re-purchased, and are especially popular with young people. According to internal documents, McDonald's plans to sell the new drinks cheaper than their competitors' counterparts, including Starbucks, according to the WSJ article.

McDonald's stock has gone into a slight negative territory this year, lagging slightly behind the S&P 500 broad market index. Still, Wall Street's confidence in McDonald's prospects remains unchanged. According to MarketWatch, more than 50% of analysts tracking the company advise buying its stock, while only 5% recommend selling.

This article was AI-translated and verified by a human editor