The Real Reason All McDonald's Soft Drinks Are Only $1

Fast-food enthusiasts know that McDonald's has a corner on the best-tasting soda fountain Coca-Cola of any chain. So, it's no surprise if you've ever stopped by a location to get a medium Coke — and maybe an order of fries, too. It turns out McDonald's and Coca-Cola go way back to the very beginning of the burger chain.

When the duo partnered, Coca-Cola helped develop a specialized method for storing the soda in stainless steel tanks that protect the syrup from temperature and light. McDonald's also stores its syrup at cold temperatures along with its water at just above freezing. The water flows through insulated tubes to ensure you get the coldest, best Coca-Cola available through the extra-wide straws so that it all hits your tastebuds just right. Between those extra steps and extensive water filtration, it's easy for McDonald's to serve up surprisingly fresh, crisp Coke that keeps customers coming back. (via MyRecipes).

Today, McDonald's deals for $1 include more options than getting a soda (in any size) — customers can get hot or iced coffee for the same price, and on Fridays, the chain also offers a free medium fry with any $1 purchase by Mobile Order and Pay, which means a large Coke from the dollar menu can earn you free fries too (via McDonald's).

$1 soda boosts sales

The McDonald's dollar menu might be reduced to just drinks these days, according to Food Beast, but there's a good reason for it. With the introduction of 2 for $5 menus, and similar options for set periods of time, the chain ends up actually making more money. Even with the $1 drink menu alone, sales rose as did shares of stock (via Reuters). According to Fortune, the chain smashed expectations with its $1 drink promotion and saw nearly a 4 percent increase in sales.

CNBC cited the success of that quarter following the $1 drink menu and $2 coffee menu as the push behind the introduction of the $1, $2, and $3 dollar menu in early 2018. The updated menu and even new technology to modernize and streamline the process at the stores have been a profitable success, and the chain believes its strategy of tiered pricing worked to draw customers toward higher-priced items (via USA Today).

The next time you stop in for nothing more than a medium Coke, keep in mind the smell of those fries or a burger just might be working hard to win you over for a larger order.

Where the dollar menu is most profitable

With prices so low, it can be puzzling as to how fast food chains make any money at all. One way the dollar menu becomes profitable is through scale. With employees focused on making a large quantity of these items rather than high-quality, customizable products, it winds up cutting costs (via BBC). It also helps that soft drinks make up a large portion of McDonald's dollar menu, and even better, filling cups from automated soda fountains requires almost zero labor from employees who are paid around the federal minimum wage (via Payscale).

The truth of the matter is that these restaurants make their money with promotions and marketing tricks. One example is the free menu items that are offered from time to time (via Customer Survey Assist). Those free items generally end up costing you money because they must be made with a minimal purchase, and even a single dollar purchase can add up over thousands and thousands (and thousands) of customers (via McDonald's).

Why dollar drinks make sense for McDonald's

Many chains are more than willing to do away with their dollar menus, but the low prices often get frugal customers inside the door. Once you enter, Eat This reported that a study shows people will order and eat 85 percent more food when offered directly from another person, like your server. However, value menus have grown over the years to include much more than your standard burger, fries, and sodas. While a smaller, more manageable menu with easy items to make might turn a decent profit, new value menus with as many as 25 items are nearly impossible to make money on, which is why some restaurants might consider dropping the menus altogether (via Time).

One of the very few, highly profitable products on the dollar menu, though, are soft drinks. Those large Coca-Colas are what make the value menu all worth it. Soft drinks can bring in up to a 90 percent profit margin, which really adds up in the eyes of the restaurant (via The Motley Fool). Fast food restaurants like McDonald's are able to cash in a bunch on their "any size" $1 soft drinks, because each one costs them less than a quarter — usually, somewhere between 5 to 20 cents to be exact (via AOL).