McDonald’s Puts Red Bull On The Menu

By Douglas A. McIntyre Published Apr 14, 8:21AM EDT

Quick Read

Fast Food Menu Competition
Rise of Low-Priced Meals
Energy Drink Surge
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McDonald’s Puts Red Bull On The Menu — © Katherine_here / Shutterstock.com

Red Bull is an enormous energy drink company. It sold 14 billion cans last year, generating $14 billion in revenue. Its primary benefit to buyers is its high level of caffeine.

Red Bull only has two major competitors. One in Monster (NASDAQ: MNST), which has a market cap of $73 billion. The other is Celsius (NASDAQ: CELH), which is gaining market share every year. It has a market cap of $9 billion. PepsiCo (NASDAQ: PEP | PEP Price Prediction) owns 11% of the company.

McDonald’s (NYSE: MCD) has just signed a deal to sell Red Bull Dragonberry Energizer

The Wall Street Journal obtained confidential documents showing it would add Red Bull, Dirty Dr. Pepper, and Mango Pineapple Refresher. They should hit McDonald’s locations in August.

McDonald’s and its major competition are looking for an edge each time they change their menus. McDonald’s has 49% of the fast food market in the US. Yum! Brands (NYSE: YUM) is second at 31%. Yums owns KFC, Taco Bell, and Pizza Hut. It has a wider menu range than McDonald’s, but it is not a place in the burger segment.

McDonald’s and the balance of the industry test more than menu items. The current battle among them focuses on menu price. Earlier this month, McDonald’s launched a $3 menu and a $4 breakfast. The $3 menu includes McChicken, McDouble, 4-Piece Chicken McNuggets, small Fries, and a medium Soft Drink. Lower-income visitors are pinched for money, McDonald’s believes. The $3 menu keeps these customers. When the new menus were released, Alyssa Buetikofer, Chief Marketing and Customer Experience Officer, McDonald’s USA, said, “As our customers’ expectations evolve, we’re making it easier for them to get the value they’re looking for – on their terms. McValue offers more choice, more flexibility, and more ways to build a meal that fits their day and budget.”

When earnings were announced, CEO Chris Kempczinski commented on the low-priced meals, which had less spin. He said the decision to offer low-priced menus was to improve its “value & affordability scores.”

Kempczinski has delivered good results recently. In the most recent quarter, comparable sales worldwide were up 5.7%. Revenue rose 10% to $7 billion. EPS was up 8% to $3.03.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.