The Journal of Agricultural and Resource Economics reports that the biggest mark-ups on any restaurant menu are drinks and side dishes, thus maximizing the profits for the business.
This holds especially true with fast food restaurants. McDonald’s, for example, spends between 13 and 18 cents to produce a soft drink.
That includes the syrup, the cup, water, ice, electricity, labor, and wastage.
If the particular restaurant has customers fill their own drinks, you can essentially take labor out of that as well.
A medium sized soft drink at McDonalds costs them 15 cents or less. The typical profit margin on fountain beverages is approximately 85%. McDonald’s profit margin is 90% or more because of their volume purchasing power.
Concentrate for 50,000 Cokes costs $2.60, including labor. A single penny’s worth of syrup makes almost 200 cups of Coke.
The new McCafe has only increased their profits from drinks, and is considered one of the main driving factors in the company’s growth. They plan to expand the McCafe globally.
