Why drinks are a pocket of profitability in the away from home market

Affordable, accessible and limitless: why drinks are a pocket of profitability in the away from home market

Discover why drinks are becoming a key profit driver in the UK away from home market, from coffee routines to Gen Z trends, premium soft drinks and low/no alcohol growth.

The drinks category is one of the most rapidly evolving in the away from home market. The competitive set for the drink occasion is growing as operators look to serve more occasions across more categories, giving consumers more choice than ever before. So why are operators focusing on their drink menus?

Established, everyday habits that consumers will protect

Consumers are still watching their budgets and spending, and food occasions away from the home are becoming more considered. Drink occasions, however, represent a lower-cost, more accessible occasion and way for consumers to engage with the away from home market. This is especially the case for to-go operators, particularly coffee shops, who often form part of consumers’ daily routines. This small, affordable habit is something consumers try to protect.

This area of protected spend is attracting more competition, with more operators outside of traditional coffee shops targeting these daily occasions. Bakery chains like Greggs and Gail’s have become huge competition to the coffee specialists, supporting their coffee offers with great value and more premium, higher quality food respectively.

Fitting into new away from home missions

Outside of the traditional coffee missions, there are more drink-only occasions emerging. Operators are pushing for these occasions as a revenue opportunity, as these will often be  additional consumption occasions for consumers to take part in – while additional food occasions are somewhat limited to how much people can physically eat, additional drink occasions have a much higher limit.

Other reasons for the emergence of drink-only occasions include consumers trading down from food occasions to save money, and as habits and tastes change with younger demographics.  Other QSR operators have been quick to react to this shift in behaviour, elevating their drinks ranges to attract drink-only missions for the first time, and to meet the new preferences of Gen Z.

The UK is the first global market where KFC’s Kwench range will be rolled out nationwide, with the first Kwench bar concession being launched in a new site in Liverpool. This features eleven drinks including shakes, boba refreshers, sparkling lemonades and iced coffees, all reflective of growing demand for more options outside of traditional hot coffee and fizzy drinks.

In the US, Taco Bell and Chick-fil-A have opened new drink-focused formats, under the new banners of Live Mas and Daybright. These follow the trials of McDonald’s CosMc’s format, which have since closed as McDonald’s have taken the learnings into its main estate.

Easier and more efficient personalisation

From an operational perspective, an expanded drinks range may seem like a challenge with additional ingredients, equipment and processes to be accounted for in a typically small space with limited staff. However, the most successful operators have built their drinks ranges from a few set bases, with flavours, toppings and added functional benefits (like collagen shots or protein powder) all being add-ins. This means that little additional staff training is needed each time a new flavour is introduced, and allows operators to be quick to respond to emerging trends, such as new flavours or health trends, to stay relevant to consumers.

Much of Costa’s drinks NPD covers all formats from hot to iced formats – Autumn’s maple hazel range included a latte, hot chocolate, iced latte and frappe. All formats staff are familiar with, just requiring one different ingredient and keeping Costa seasonally relevant.

This also gives more autonomy to the consumer. Personalisation of orders is becoming more of a consumer expectation, so this modular approach to drinks with a set base and then different add-ins allows the customer to make their own order, with less added pressure on staff and operational processes.

An opportunity to combat declining alcohol sales

Alcohol sales are declining, posing a huge threat to wet-led venues like pubs and nightclubs and restaurants who are seeing declining sales from a drop in alcohol. This is driven by multiple factors, including generational change with younger consumers drinking less; affordability of drinking out meaning consumers are cutting frequency and spend per occasion; health factors pushing consumers to drink less for both their physical and mental health; societal shift towards more in home occasions, including drinking at home instead of out of home.

There are opportunities for operators to fight back, such as stocking more low and no options to retain visits to venues. However, with alcohol driving much of the sales value and margin in these sites, premiumisation will be needed to recapture lost spend and prevent full trade downs to standard soft drinks. Elevated mocktails or soft drink options will help drive the appeal of consumers going out for drink occasions, even if they aren’t drinking alcohol, especially where these are drinks that consumers cannot easily replicate themselves at home. Angry Crab Shack has created non-alcoholic versions of its most popular cocktails, encouraging customers to pay more by trading up from water or a standard soft drink, retaining some of the spend and the experience by helping non-drinkers feel like they are missing out.

Three actions drinks suppliers can take to support operators in making the most of the drinks opportunity:

1. Support operators with flexible drink solutions
   Develop ranges and ingredients that work across multiple formats (hot, iced and blended) and that can be easily integrated into existing preparation and ordering processes. Help operators deliver an elevated menu to consumers, while having a more streamlined back of house process.

2. Lean into premium soft and low/no innovation
   Support wet-led venues replace lost alcohol value by offering elevated non-alcoholic options that feel more premium and hard to replicate at home to keep driving footfall. Additionally, keep this simple where possible, with pre-made mixes or garnishes to ease pressure on bar staff.

3. Align NPD with health, functionality and younger consumer tastes
   In QSR especially, focus innovation on functional benefits, bold flavours and visually exciting drinks that will attract Gen Z and health-conscious consumers. Work with operators to make sure their core range doesn’t suffer so as not to lose existing consumers, while balancing taking advantage of the new opportunities from the next generation

Looking for more insight on drink innovation in the away from home market?

• Global inspiration in away from home – the most recent innovative concepts from away from home operators across the world

• Fast food specialists report 2025 – the key players, challenges and opportunities in the sector in the UK and global markets as this sector becomes a larger player in drink occasions 

• How the away from home market will transform by 2035 – the key themes shaping the market from food and drink trends to health and tech