A few years ago, the only mention of soft drinks at restaurants tended to be on menus. Now, the typical fast-feeder displays five to 10 soft drink signs, according to News America Marketing, which installs in-store displays for Coca-Cola Co. and other clients. Splashy soft drink graphics are becoming bolder in their placement, with greater prominence on menu boards and on such increasingly valuable real estate as windows, ceilings and even floors. And custom programs are also evolving between soft-drink marketers and fast-feeders.
"It's always been an incestuous business with PepsiCo owning restaurants and McDonald's and Coke being so close-knit," said Neil Stern, partner at consulting company McMillan/Dolittle. Over time, "they really have become strategic partners."
The renewed emphasis comes as soda marketers increasingly view fast-food units as "a place to sell but also as a place to promote and talk about your brand," he said. "While [that mindset] has always been there, now it's much more overt." With some 44 million transactions at McDonald's Corp. restaurants each day, marketers "begin thinking about McDonald's as a billboard," Mr. Stern said.
"Consumers are harder to reach and the best place to reach them is at point of purchase," said Bob Brouillette, senior VP-business development at News America Marketing.
"Ultimately it ends up selling more fries and Cokes," said Jerry Wilson, VP-McDonald's Group, Coca-Cola North America.
By bundling drinks, fries and sandwiches in combo meals, fast-feeders have "achieved a new consumer behavior -- getting customers to take a soft drink out with them at a time when they typically don't include a beverage," said Harry Balzer, VP at NPD Group. In 1999, carbonated soft drinks were included in 34.9% of all meals and snacks purchased in a restaurant, up from 29.7% in 1988. A distant second-fastest growth item is french fries.
Custom displays are just one effort Coca-Cola provides the Golden Arches -- from new self-service beverage dispensing systems to marketing consultation and crew training -- to maximize the partnership.
"Our intent is to make sure we try to work with both brands in a manner that results in brand synergy between our two companies," said Mr. Wilson. For example, the soft drink and burger giants collaborated on creating a modular merchandising system to allow operators to customize displays.
Among the newer icons in McDonald's POP displays are a french fry entwined with a straw and a cola bottle on its side with the word "MMMaahhh." As many as 10 to 15 display elements can be put in place in a restaurant.
Through the first half of 2000, Coca-Cola has been measuring the new McDonald's program and found it boosted beverage sales 2% to 6%, a spokesman said.
Another key reason for the incursion of fast-food POP is the increased competition for fountain dollars. Restaurants "are the largest [soft drink] distribution channel next to supermarkets," said John Sicher, editor of Beverage Digest, who added fountain sales account for about one-fourth of the 10 million cases of total industry volume.
Coca-Cola Co. dominates the fountain business for carbonated soft drinks with a 65% share, while the remainder is split between PepsiCo and Dr Pepper/Seven Up, respectively. Moreover, "While the overall carbonated soft drink volume through supermarkets is flat or down, Coke's fountain volume is up 5%," said Mr. Sicher.
PepsiCo is concentrating its merchandising efforts on improving menu boards at its fast-food accounts to increase combo meal sales. Old menus devoted 20% of space to combo meals. Now, at least 50% of menu space is devoted to combo meals. Company research showed that by making combo meals that include a soft drink a prominent part of the menu board, sales increased, particularly in the drive-through.
Case in point: At several large PepsiCo accounts, combo meal purchases have increased 15% to 25% following installation of new menus.
The company has also presented menu designs, created by TLP, Dallas, to such chains as Au Bon Pain Co., Subway Restaurants and Taco Bell Corp.
Subway is one of the few chains that split cola pouring rights between Coca-Cola and PepsiCo. About 80% of the units offer Pepsi products and those franchisees earn merchandising funds based on monthly gallon sales.
"They'll tell us `Here are the best ways for you to sell more soft drinks,' " said Chris Carroll, marketing director for Subway's Franchisee Advertising Fund Trust. The result is reflected in upsizing offers and in combo meals, he said.
Coca-Cola also used product innovation to grow fountain sales at Burger King Corp. The fast-feeder rolled out frozen Coke last year, and the fizzy slush is typically featured in a "standee" cutout display near the ordering unit in the chain's drive-throughs and in doorways.
The Diageo unit uses self-serve drink stations as a way to push beverage sales. "Customers don't have to ask for refills and it encourages them to buy drinks because they can control the volume," said a spokeswoman. The stations are "a visible reminder to make a soft drink purchase," she added.
While the Dr Pepper brand accounts for 90% of Dr Pepper/Seven Up's fountain sales, choice is a big selling point, according to Diane Stephenson, VP-marketing, fountain/food service. She said the number of fountain valves at fast-food chains has jumped from five a decade ago to 10 today.
"Our message is if you're going to have a lineup, consumers want the best brands and more of them," she said. "We're the large drink experts," she added, telling operators to "go large to maximize sales." The company provides stock promotional materials that include the tagline "Live life large."
One caveat to the signage boom is information overload. "Less is more" could be Burger King's point-of-purchase mantra. The chain is revamping its drive-through systems by simplifying signs and placing them according to zones. A recent TV spot that ran in California highlighted the No. 2 chain's "stress-free" drive-through.
"We found consumers are troubled by drive-through clutter," said Jeff Bonasia, BK's director of marketing, global transformation.
Eliminating the clutter makes sense to Craig Childress, director-prototype research at Envirosell, a behavioral research company. He estimated there are between four and 14 different messages in a single fast-food environment, when the amount the average person can handle "may be more toward five or six."
"At what point do you diminish your own brand if a supplier brand gets too powerful in communicating its own messages?" asked Mr. Stern.