ATLANTA — Coca-Cola is branching out into new customizable drinks and trend-driven equipment as consumers — and food service operators — increasingly want more options.
Tucked away in an anonymous office park not far from its global headquarters here, Coke has been working on a flood of innovation at its secretive labs, including a way for its Freestyle drink dispensers to make dirty sodas, which combine pop with flavored syrups, cream or other ingredients. In partnership with AMC Theatres, it is testing a Micro Matic dispenser that can make brightly colored refreshers. And Coke has more white-label beverage options on the way, like an energy drink that can be customized by color and flavor.
For many restaurants, handcrafted drinks like refreshers or iced coffee have become an important way to drive traffic and sales, even as diners broadly cut their spending. In the second quarter of this year, beverage servings at restaurants outpaced both servings of food alone and food with beverages, according to Circana data. When consumers are away from home, a drink often represents more than hydration, particularly for Generation Z.
"Oftentimes these beverages are an opportunity to take a break, get some energy or protein, have a treat, at a lower price point," David Portalatin, Circana senior vice president and food service industry advisor, told CNBC.
From McDonald's to Wendy's, longtime Coke customers have been expanding their beverage offerings to meet the shift in consumer behavior and boost their profit margins. As operators seek to add more drinks to their menus, Coke must add more convenient beverage options — or risk losing sales to a competitor.
"It's our job to ensure that we're providing unique experiences and beverages because it's not a bonus now with consumers — it's the norm, they expect it," said Megan Tallman, Coke's vice president of dispensed equipment and innovation for its North American business. "When you think about Gen Z, they are okay paying $10 for a drink that is craveable and that they can show on their Instagram or on TikTok, which is helping our customers drive margin and also beverage attachment."
This July, Coca-Cola's Freestyle drink dispenser celebrated its 17th anniversary.
"Honestly, if you fast forward to today, Freestyle is more relevant today than probably it was over a decade ago," Tallman said, crediting the machine's dozens of flavors.
Even with the variety it offers, Coke is still trying to evolve to keep up.
In the time since the Freestyle was introduced, the number of specialty beverage chains has exploded, offering customers nearly unlimited ways to customize their drinks, from sugar content to toppings. Market research firm Technomic tracks more than 100 different chains, with more than 41,000 locations across the U.S. combined, selling everything from coffee to juice to boba.
Ever since Freestyle began popping up in restaurants and movie theaters, the dispensers have poured more than 67 billion 8-ounce servings of beverages; Coke has been able to track them all, thanks to the equipment's real-time data collection. That data is coming in handy now.
Inside its Equipment Innovation Center in Atlanta, a massive television screen displays real-time data showing what drinks dispensed by the Freestyle are trending, what time of day and where — from the region to the type of business. AHA sparkling water, for example, is trending up at office buildings and hospitals.
Insights from Freestyle dispensers also help the company discover new drinks that it can launch in grocery stores, like the limited-time Coca-Cola Orange Cream, which combines its namesake soda with vanilla and orange syrup.
"If we see that the flavors that we're offering to consumers in food service are actually resonating — it's the largest testing platform out there," Tallman said.
First is the Freestyle Mini, which initially launched in Europe. Intended for bars and restaurants with limited space, the dispenser holds up to 16 drink options, more than double the choices available in a traditional soda gun. Coke unveiled the new smaller machine at the National Restaurant Association Show in Chicago this spring, but the company has not yet sold it to customers in the U.S.