Fast food has lagged the SP500. Their comeback story... beverages?

Fast‑food chains have struggled with fewer customer visits and sluggish sales since last year.

The reason for all this: price hikes and to a lesser extent, shifting consumer tastes.

But they have a comeback plan... beverages.

It makes sense when you think about it. Beverages have higher margins than food, require less labor to make, and have simpler supply chains (and longer shelf life in most cases).

There is plenty of room for growth. Many customers skip drinks when placing meal orders, so it’s an easy boost if they are enticed to add one. Bold flavors and attractive visuals could fuel spontaneous purchases.

## McDonald’s Leads the Charge

McDonald's recently announced plans to test a range of cold coffees, fruity refreshers, crafted sodas, and energy drinks in 500 US restaurants, starting next month.

McDonald’s wants to lure customers at all times of the day—from the morning boost to evening. “We’re not just serving drinks—we’re creating new reasons to visit, new ways to enjoy, and new moments to savor,” said Buetikofer.

## Rivals Follow Quickly

Just a day after McDonald’s revealed its beverage expansion, Burger King followed with an announcement of its own—rolling out a summer lineup featuring lemonades and iced coffee topped with flavored cold foam.

Wendy’s joined in as well, adding cold brew with cold foam and fruit-flavored energy drinks to its seasonal menu. “Beverage innovation will be a key enabler of growth across multiple dayparts, especially breakfast and snacking occasions,” interim CEO Ken Cook told investors on a recent earnings call.

Taco Bell has taken an even bolder step. Last December, it opened a “Live Más Café” inside a California location, offering more than 30 signature beverages, from caffeinated aguas frescas to churro-inspired frappes. The concept, the company explained, was designed around Gen Z’s appetite for customized drinks.

Six months in, the test proved promising: sales at the café jumped 40%, prompting Taco Bell to announce plans for 30 more cafés by year’s end. On top of that, the chain rolled out a nationwide lineup of Refrescas, including a strawberry–passion fruit green tea and a pineapple–lime energy drink. The long-term target: $5 billion in beverage sales by 2030.

## The Risks

Novelty and social media buzz can drive short-term hype, but drinks are a “nice-to-have, not a must-have,” warns Neuberger Berman analyst Kevin McCarthy. When budgets tighten, they’re the first item cut.

Operational complexity is another hurdle. Too many customizations can slow service—something even Starbucks had to confront by trimming its menu. “You don’t want to lose a burger customer because someone’s drink order is holding up the drive-thru,” notes BTIG analyst Peter Saleh.

Chains are aware of this. Wendy’s says its new energy drinks run through the existing soda fountain, while cold foam add-ins are simple to execute.

My takeaway from this, take a closer look at Wendy's. The stock is down 38% in the past year, I want to understand why and see if there's an opportunity there. More research to follow!