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Why refreshers are everywhere on menus

By Jordan Valinsky, CNN

New York (CNN) — The latest craze in fast food is actually a beverage, albeit one that’s hard to define.

From Starbucks to Sonic, Dunkin’ and soon McDonald’s, several chains are adding or expanding their beverage lineup with “Refreshers” — drinks flavored with fruit that have bright colors and appeal to younger consumers.

Besides sharing the Refresher name (or in Taco Bell’s case, Refrescas), no two are the same. Some are high in caffeine or contain sugar, like at Starbucks or Dunkin’; but others are caffeine-free, like Panera’s new additions; while Sonic’s are either bubbly or flat.

The drinks are “not a specifically defined category,” according to Maeve Webster, president of consulting firm Menu Matters, so chains have a “wide latitude for innovation.”

They are an “affordable indulgence” as consumers cut back on eating out, said David Henkes, senior principal at Technomic.

Plus, drinks are on a tear: Sales at beverage and snack-focused chains jumped 8.1% last year, while burger chains grew just 0.2%, according to newly released Technomic data.

Refreshers are aimed at afternoon consumers who are cutting back on their coffee intake, Webster said.

Younger consumers are also ditching hot drinks in favor of colorful, iced options that carry the perception of a “health halo.” But despite the fruit, the sugary drinks are not necessarily healthier, she said.

Rise of the refreshers

Confused about what refreshers are? Well, it’s easier to define what they’re not, said Claire Conaghan, a trendologist for research firm Datassential. They aren’t coffee or iced tea.

The original refresher was an Arnold Palmer, Conaghan told CNN. “It’s got caffeine from the iced tea and then it mixes with the lemonade, which is a refreshing fruit component,” she said.

But in 2012, Starbucks pioneered the concept among chains, adding it to its menu for people who don’t drink coffee or tea. Refreshers have been a success for Starbucks, now generating $2 billion in annual US sales, the company said. Earlier this month, it launched new, caffeinated versions.

Refreshers have also been a “major growth driver” for Dunkin’, a spokesperson told CNN. The category recorded double-digit sales gains in each of the past four years for the privately held brand. (Specific sales numbers weren’t disclosed.)

Dunkin’ often releases new variations and has enlisted high-profile stars, like singer Sabrina Carpenter and rapper Morgan Thee Stallion, for marketing efforts.

Swig, a Utah-based chain known for its dirty sodas, is having success with its selection of refreshers and even lets people make their own. Refreshers, which the chain defines as water-based drinks, is among its top-performing beverages.

The drinks attract younger women, typically age 16 to 35, and are aimed at health-conscious customers that don’t want Swig’s more caloric and filling dirty sodas, CEO Alex Dunn said.

“We’re fitting into their day kind of in that afternoon where they need that spark, a little treat, a little time for themselves,” he told CNN.

What’s next?

Although the word “refresher” only appears on 1% of US menus, it’s forecasted to grow by nearly 130% over the next four years, according to Datassential. Conaghan predicts that growth will primarily come from versions that have little or no caffeine.

Now, McDonald’s wants to get in on the action. Beginning May 6, three refreshers will be added to US menus, in flavors like Strawberry Watermelon and Mango Pineapple. The additions are part of broader permanent changes to its soda selection, first tested at its defunct CosMc’s spinoff.

Last year, McDonald’s made drinks one its three core menu categories, alongside beef and chicken.

“We expect beverages is going to be a place where there’s significant growth in the profit pool,” CEO Chris Kempczinski said on an earnings call last year. “We think there’s more that we can be doing to capture our fair share of that.”

The hope is to win back younger customers who have defected to chains like Dutch Bros or 7 Brew for their beverage fix. Refreshers are also priced higher than fountain drinks and are more profitable compared to food offerings, especially as protein prices rise.

“Beverages generally have the highest profit margins on any menu,” said Webster. She pointed out that prices for refreshers can climb as high as $10, so the profit margin can “easily reach” about 80%.

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