• Ben Kitay

What value do soft drink companies really add?

First let’s define value. In the restaurant world, there are very few brands that sneak through the operating environment to the consumer’s view. You don’t know if their produce is made by Green Giant. You don’t see the brand of dough the pizza is made with. You don’t know if their chicken is Purdue or Tyson. But soft drinks are different. Restaurants traditionally let the consumer know what brand of soft drink they will be purchasing.


Imagine if this were not the case. Would you, as a restaurant operator brand your cola or lemon lime product on the fountain as Joe’s Pizza cola? Hamburger King Lemon Lime? Can you imagine going to McDonalds and ordering McCola?


Probably not. That’s why it makes sense to do exclusive soft drink deals with brands that consumers trust like Coke and Pepsi. If you are a cola drinker you expect to see Coke or Pepsi offered. It’s just that simple. If it’s Joe’s cola, you are not likely to drink it.


And yes, there is a lot of value added by the monster brands of Coke, Pepsi, Sprite, diet Pepsi, and all the other ones on the fountains. Consumers immediately know what they are getting without having to look at a menu. And that speeds up the service times and allows restaurants to charge a little more for the drinks, which are already somewhat profitable.


But believe it or not the value-added actually ends there. The cola companies will claim that they can increase your beverage incidence (the ratio of beverages sold to entrees sold). They will claim that they have superior equipment. They will claim that their systems for managing service and installations are superior.


The truth is otherwise. Cola companies will not raise your beverage incidence. Only you can. It takes a lot of effort. You and your crews are the only people who have that ability. Raising beverage incidence is never due to a choice of Coke versus Pepsi. Its all about merchandising, promoting, crew incentives, cleanliness, price promotion, and other factors that YOU control, not the soft drink companies.


As for their equipment superiority claims, both cola companies buy equipment from the same suppliers. So, forget that argument. Freestyle could be the exception, but Freestyle has pretty much been played out in the industry. It is no advantage. It has become neither traffic building nor cost effective…in fact, it seems the opposite. Many of our clients simply want out of it because the costs are high, the lines are elongated, and the service and downtime is too much. And many complain that the taste of drinks from Freestyle is just not right.


The cola companies both have impressive 24-hour service centers managing their service and installation capabilities. Neither has a real advantage. Both do a pretty good job with it. Both companies have lots of people with headphones sitting by dispatch desks waiting for you to call. And they both have adequate armies of well-trained technicians.


And Dr. Pepper? They offer no infrastructure. No equipment, no service, nothing. All they have is a brand, which you frankly don’t need unless you are in Texas or Oklahoma. Make sure you remember that.


The answer to what value they add really comes down to consumer acceptance. And none of them have an advantage in that regard in the USA.


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