Fast Food Chains Fuel Energy Drink Frenzy to Boost Sales

Fast food chains like McDonald's and Starbucks are aggressively rolling out energy drinks to boost sales. Research by Citi restaurant analyst Jon Tower reveals that 60% of energy drink consumption at restaurants/coffee shops is incremental, meaning it wouldn't have occurred elsewhere. In fact, 49% of respondents suggested an energy drink purchased at a restaurant would replace one bought elsewhere.

The majority of consumers are interested in purchasing energy drinks from restaurants or coffee shops, with 74% expressing interest and 44% being very interested. Notably, most energy drink purchases occur before lunch, with packaged food ordered alongside the beverage at 53% and prepared food at 47%. McDonald's has already launched its Red Bull Dragonberry Energizer nationwide on August 17, while Starbucks introduced its Energy Refreshers lineup in April.

Dave's Hot Chicken and 7 Brew have also scaled their energy drink offerings, with regional chains aggressively promoting them. For investors, the push into energy drinks presents two scenarios: a nice-to-have margin boost or a risk to pure-play energy drink sellers like Celsius Holdings (CELH) and Monster (MNST), which may see sales decline as consumers opt for larger energy drinks from fast food stops.