Comment by JKCalhoun
2 days ago
Something like this has been going on in the restaurant world since seemingly forever. When I worked at a pizza joint (40-some years ago) we only served Pepsi drinks.
I was young and dumb enough then not to know that, for example, 7-Up and Sprite were not independent soft-drinks. I assumed every flavor of soda was its own company. I soon started to notice the drink pattern based on whether they had Coke or Pepsi. Those two owned all the other flavors—and they each had their own variant of the other's.
I was told too by management that we only bought Pepsi drinks. Again, native me thought, "Why not have both Coke and Pepsi and let the customer decide?" I am not sure whether there was a pricing issue that prevented management from buying both—like the loss of a discount for going Coke-only or whatever.
Of course you always saw signage, etc. around the restaurant with Pepsi logos (or Coca-Cola logos at other restaurants) so you knew there were gifts in other forms that one of the two would entice the owner with.
What a slow growing up I have gone through since then. It seems like the kind of thing they ought to teach in primary education.
The deals for this type of product positioning occur quite high up in the chain.
To give an example Yum! brands (KFC, Pizza Hut, Taco Bell, etc) was formed as a subsidiary of PepsiCo. Although PepsiCo has divested from Yum, their pre-existing relationship is why these restaurants only serve Pepsi's soft drinks.
Deal-making is also why you see patterns like this emerge in other places such as convenience stores that only sell beverages from the Coca-cola company (i.e. higher volume sales from just one supplier yields a better discount than splitting sales across multiple suppliers). It's relatively rarer to see more than one beverage supplier at a restaurant, club or convenience outlet.
For convenience stores, particularly ones with few or no built-in wall coolers, the typical deal is the Coca-Cola or Pepsi distributor will provide and maintain a free-standing cooler, but it can only hold products from that distributor (often the distributor stocks it for you). Thus you'll typically see Coca-Cola and Pepsi products segregated in different coolers, if the store sells both.
I presume, but don't know first-hand, that for built-in coolers you want stocked by the distributor, they'll also require segregation. Frito-Lay distributors operate similarly--they'll come in and stock your shelf if you want (I dunno if there's a sales premium), but typically they'll require the Frito-Lay products be segregated, and they'll provide branded shelving if you want.
Red Bull gives you a discount if their mini fridge is close to the register
Don’t they have explicit agreements to not sell the competing vendors’ products?
Or is that just urban legend?
The only restaurants I’ve ever seen selling Coke and Pepsi were in less developed countries…
There are some but it's rare. Most restaurants sell only one or the other.
Is convenience stores only selling Coke or Pepsi an American thing?
Because over here in the UK, every shop I've seen that sells soft drinks sells both brands at the same time. Probably alongside a bunch of others.
Then again, the branded coolers seem to be more of a thing in restaurants and takeaways rather than shops.
In my experience living here my entire life it’s _far_ more common for a restaurant/ fast food joint to have exclusive deals with one or the other.
That being said there is one popular gas station chain around here that historically sold Coke and Pepsi products in their fountains but in the past decade or so they’ve switched to exclusively Coke products in the fountains (but they still sell bottled Pepsi products)
Coca-cola has a President (probably called a VP in other companies) designated only for their relationship with McD
https://www.coca-colacompany.com/about-us/leadership/roberto...
> It's relatively rarer to see more than one beverage supplier at a restaurant, club or convenience outlet.
Wait what? What do you mean by convenience outlet? We must have different definitions.
Ha, the University where I work signed an exclusive agreement to only sell Pepsi products on campus. I'm sure there was some kickback money given to people here to push it through.
My wife's university has a totally egregious contract which is exclusive to a food provider for cafeteria food and event catering.
If you want to, say, have a student group sell cookies or whatever, the provider has to approve and you have to pay to host it.
The contract is for 10 years. No freaking way somebody signed off on that without money under the table.
My wife's employer has a very similar thing going on. They have a cafeteria staffed by a catering company, and the contract requires that they (the employer) use the catering company for all things that take place in the building. A manager can't go out and buy donuts for a meeting, instead they would have to use the caterer who is both worse quality and more expensive. This caterer even tried to get the company to chase off food trucks that were coming to the area, though thankfully that went nowhere because the food trucks were on public streets and not private property.
It is truly an awful contract, with no benefit at all to the employer that I can see. Like you, I conclude that some executive must have gotten kickbacks for signing this.
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Sodexo or Aramark I assume? Unfortunately standard practice on University campuses across Canada and the USA.
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It’s probably more there are only two or three companies, if that, that can service a customer that large and meet their requirements/SLAs by contract. And the three all happen to have the same sort of agreements required.
Large student unions are also renowned for reselling their cheap volume deal beer on the grey market to keep their volumes high. I wonder if that is all through the books?
Coke used to sell their high volume customers a different syrup, and give them different equipment to pour it, that was incompatible with the low volume customers equipment, to try and stop this
>I'm sure there was some kickback money given to people here to push it through.
Why? Is it that hard to imagine pepsi doing it in an above-board way, eg. giving a discount to the university directly?
I worked as a buyer in edu, oh the grease is built in to the system from the vendors who will frequently shower you with coffee and donuts to much friendlier offers to get sales.
Why is it so hard to imagine people who work in education would have flexible ethics for personal gain?
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This was my first reaction, too.
The buyer at the university could just be doing their job, signing contracts to ensure (ideally) stable vendors and a good price by signing such a long contract term.
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Coca-Cola supplies Disney{land,world}s with free drinks, in exchange for their branding in the parks.
Yea, when I worked at Dominos we were charging like $2.50 for a 20 oz coke and $3.50 for a 2 liter.
Since the same 2 liter was like $1 at the grocery store, I thought we were gouging costumers and making bank on them, and figured the manager was being dramatic whenever inventory counts were off by a few.
Turned out we had a really raw deal with Coke, and were only charging like 25-50¢ more than we bought from for. And we were also required to order them from the distributor, to prevent us from stocking the cooler with cheaper ones from the grocery store.
> Again, native me thought, "Why not have both Coke and Pepsi and let the customer decide?" I am not sure whether there was a pricing issue that prevented management from buying both—like the loss of a discount for going Coke-only or whatever.
There's a bunch of pricing stuff (typically the bottler sells syrup and rents dispensers and may supply drinkware, and you get discounts on everything when you buy more syrup, and you get advertising subsidies when you put the brand logo in your ad, etc), but there's also logistics. More options means a bigger soda fountain and probably more space storing syrup.
I'm not sure I've ever seen mixed brands in a single dispenser (other than 7up+DrPepper which is bottled regionally by Coke bottlers in some regions and Pepsi bottlers in others; so you might see Coke with 7up and DrPepper or with Sprite and MrPibb). But, rarely, I've seen dispensers from both. Mostly at convenience stores and also the Yahoo employee cafeteria at the Sunnyvale HQ on First Ave (which they left some time ago). Some restaurants that don't have a fountain will stock cans from multiple brands, too.
All that said, from my life experience, very few people express a strong preference, giving customers a choice probably isn't worth the effort.
Are you referring to the fact that 7up/Dr pepper are distributed by pepsico? They still have historically been independent from the big 2 as far as product branding since inception, most recently being owned by Schweppes.
Dr. Pepper is distributed by Coke in some states/countries, Pepsi in others, and by its own distribution network in like 30 US states. A friend likened it, not without a certain verisimilitude, to the result of the Treaty of Tordesillas in 1494.
The Dr Pepper/Coke agreement was terminated this year.
https://finance.yahoo.com/news/dr-pepper-end-partnership-cok...
I think they were just giving an example, and had assumed each separate flavor was a separate company, but happened to choose a bad one with 7up as it is a different beast then the rest.
There's a complicated UK beer version of this with more parties. Basically pubs might be any of:
- directly owned and managed by the brewery
- owned by the brewery and leased to a manager, like a franchise
- independent, but contracted exclusively
- genuinely independent
Contracted pubs may also have limited supplies of "guest ales". Usually there's sufficient local competition to keep the pubs good, but local monocultures can also be a problem.
Most of the pubs are owned by the PubCos Back in the past it was mostly brewery owned with 6 big brewers owning most of them. So a law got passed in the 90s which limited the breweries to a max of 2k pubs. Unfortunately what happened was we ended up with a bunch of very large Pubcos who were often linked to a particular brewery anyway (some were formed by former brewery execs and the pubs were "donated" in return for an agreement to keep buying from the brewery"). The Pubcos started with low rents but high stock prices but now go for both high rents and high stocks. Its why often see pubs changing hands frequently when someone tries the dream of pub landlordship but runs out of money. Its why Wetherspoons is "cheap" since generally they convert buildings and so have a freehouse model.
And Pizza Hut ran itself into the ground despite being incredibly popular when I was a child
This is world wide. Coke and Pepsi not only provide restaurants with soft drinks, but also all other drinks, most importantly beer. Local beverage distributors will be with either one or the other.
Restaurant owners will sign a contract with a distributor to buy only from them, and in exchange get discounts, free equipment rentals such as drink fridges and beer taps, and things like sunshades, tables and chairs, signage, etc.