Arby's Thinking Coke in 2018

The Coca-Cola Company has won the contract to sell soft drinks at quick-serve chain Arby’s.  The contract is a coup for the Atlanta-based beverage giant as they unseated their rival PepsiCo Inc. in the process.   The deal will add more than 3,200 Arby’s locations to Coca-Cola’s portfolio of restaurant clients.

Arby's latest logo and restaurant design

Arby’s Restaurant Group Inc., which is based in Sandy Springs, is controlled by Atlanta-based Roark Capital Group. Roark owns over a dozen multi-unit restaurant brands such as Moe's Southwest Grill, Hardee's/Carl's Jr., Jimmy John's, and Corner Bakery Cafe, most of which already offer Coke products. 

Roark purchased Arby's in 2011 when it was spun off by Wendy's/Arby's Group.  At the time of the acquisition, Arby's was already a PepsiCo client.  Arby's, which first opened in Boardman, Ohio in 1964, operated for over 40 years without a national beverage partnership.  That changed in late 2005 when the company announced their partnership with PepsiCo.  

"PepsiCo's extensive portfolio of popular beverage brands, coupled with the opportunities available serving salty snacks, creates a mutually beneficial relationship," said Doug Benham, then President & CEO of Arby's Restaurant Group, Inc.

This week, however, things changed. 

 “After conducting a thorough and highly competitive review of our current beverage contract, which concludes in early 2018, we have ultimately decided to transition to the Coca-Cola Co.,” Arby’s spokesman Chris Fuller said on Thursday. “We expect the transition to begin during the first quarter of 2018.” 

Partnership flips in the restaurant/soda industries are rare, given the length of the contracts, but do happen from time to time.  

In 2002, Coke became the exclusive soft drink and bottled water supplier to Regal Cinemas, who had previously had an agreement with Pepsi.  In 2003, Coke won the contract with Subway Restaurants, displacing Pepsi, which had been the sub shop's soda provider since 1988.  Last year, PepsiCo won over Subway Canada, unseating Coke.  

Most recently, and most notably, in 2013, Coke lost their exclusive agreement with Costco Wholesale, who instead signed a contract with Pepsi.  Costco dishes out more than 100 million hot dogs at its food courts, which is more than four times what Major League Baseball sold at its ballparks in 2011, according to the National Hot Dog & Sausage Council.  Every hotdog sold at Costco, of course, comes with a 20 ounce beverage, now a Pepsi beverage. 

“Coca-Cola’s commanding share of the U.S. fountain business makes them a formidable opponent in the fight for restaurant taps, even as PepsiCo has stepped up its game in recent years by leveraging its massive food business,” said Duane Stanford, editor-in-chief of trade publication Beverage-Digest, which first reported the news.

Coke has longstanding partnerships with industry titans McDonald's, Wendy's and Chick-fil-A, among others, while Pepsi has partnerships with KFC, Taco Bell and Pizza Hut, all of which they used to own, as well as Culver's and Bojangles', among others.  

While I have been personally unimpressed with Coca-Cola's Freestyle beverage unit, and Pepsi's "me too" Spire contraption, both of which offer consumers a greater array of beverage choices than a traditional fountain,  there is definitely the need for continued innovation like this in the soft drink industry.   Consumers continue to shift away from soda in favor of other types of beverages, and the fact that Coke and Pepsi both realize this and are each investing in ways to both improve and diversify their respective businesses is a good sign. 

How frequently do you purchase a fountain soda when eating at a quick serve restaurant?  Does the beverage partnership at a given restaurant impact your dining decision?  If you're a native Atlantan, do you consider it a sin to drink Pepsi?

Please share your thoughts below. 

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