Confidence & Sales are Up a Will Diners Drink Up?

Recovery in the restaurant sector began in March, according to Wall Street analysts, and industry observers noted an uptick in sales for the first quarter of 2010. Most attribute the shift to stabilized unemployment, which leads to stronger consumer confidence. Several chains are showing same-store sales gains, and not all are QSRs or fast-casual concepts. In its recent consumer survey, NPD Group found that fewer consumers are choosing less-expensive restaurants and looking for deals than they were a year ago. The industry is feeling more positive and apparently gearing up for higher traffic and sales: 42,500 restaurant jobs were added in the first quarter of 2010, according to the Bureau of Labor Statistics.

All this is good news, but savvy operators are examining how to court a customer now accustomed to getting “deals” when dining out. Some are continuing to offer strong value propositions. Fleming’s Prime Steakhouse & Wine Bar, for example, just launched its prix fixe three-course spring menu at $39.95. Darden Restaurants, however, is opting to be selective about discounting programs; unlike other casual concepts, the Orlando-based operator of Olive Garden and Red Lobster resisted the trend toward bundling that led to the “2 for $20” deal at Applebee’s and the more aggressive “3 for $20” at Chili’s, which Brinker recently announced would soon end.

What does all this mean for beverage sales? Well, many guests are now trained to dine where they get the best deal, and that may take some time to undo. But as diners feel more confident, chances are they’ll begin to make restaurant selections as well as menu item choices based on factors other than price. What’s more, those who promote quality libations as part of the value equation and position a good cocktail, interesting beer or unique wine as an “affordable indulgence” stand to drive drink sales, especially in casual dining settings.

The National Restaurant Association predicts total restaurant sales will decline 0.9 percent in 2010 — the third year of decline, although the slowest of the three. Depending upon how beverage programs are positioned, promoted and run, there’s no reason drink sales can’t grow.


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