A Monster test for McDonald’s
High-caffeine drinks are being offered in 20 American McDonald’s restaurants as the burger chain tests a potential new market.
|||Chicago - McDonald’s is selling Monster Beverage Corporation energy drinks in about 20 of its US restaurants, potentially opening up a new market for the high-caffeine beverages.
“We’re always gathering feedback from customers on the food and beverages they’d like to be served at McDonald’s, and this is another example,” Lisa McComb, a spokeswoman for the fast-food chain, said in an email. Locations in Michigan, Ohio, Georgia, Florida and Illinois are testing the drinks, she said.
Monster shares rose the most in almost eight months on Tuesday, fuelled by speculation that the test could open up a new sales channel for its beverages. Getting the energy drinks into quick-service restaurants like McDonald’s, which has 14,350 US locations, could add as much as $1.5 billion in revenue for Monster in the US alone, said Robert Ottenstein, an Evercore ISI analyst in New York. Ottenstein, who reported on the Monster test in a note on Tuesday morning, said Oak Brook, Illinois-based McDonald’s has seen “positive results”.
Monster, which declined to comment on the report, jumped 5.2 percent to $139.61 at the close in New York, the biggest gain since February 27. The shares are now up 29 percent this year.
Last year, Monster, based in Corona, California, forged a pact with Coca-Cola that transferred all of its US and Canada distribution to the soda giant. Coca-Cola also agreed to swap some brands and buy a 17 percent stake in Monster for about $2.15 billion.
McDonald’s has been trying to turn around its struggling US business and named Steve Easterbrook to the chief executive officer job earlier this year. The chain is betting that new fare including a buttermilk chicken sandwich and all-day breakfast will help bring back diners, especially younger ones, who are defaulting to fast-casual rivals.
Monster sells low-carb, chocolate shake and coffee-based energy drinks. The company also sells beverages made with tea and lemonade.
At McDonald’s, Monster’s beverages are typically sold as part of a value meal, with customers paying about $1.50 more to get the Monster drink, Ottenstein said.
The move is “generating incremental revenue and traffic for stores, with some customers coming in just to purchase Monster”, he said.
* With assistance from Jennifer Kaplan in New York
BLOOMBERG