Drink Sales at the Top 50 Chains

What’s the secret to growth in a flat environment? Stealing market share. How do you steal share? By creating a compelling point of differentiation. Thanks to the current halo around adult beverages from craft beer to unique spirits and approachable wines, a strong beverage program can provide that strong point of differentiation.

That battle for market share is on among leading chains, and exemplified in the Beverage Alcohol Sales in the Top 50 Chains data shared with VIBE by Technomic, the Chicago-based hospitality market research firm. “In a no-growth environment, a take-share environment, we look at the beverage program and alcohol specifically as a differentiating factor,” says David Henkes, Vice President and Adult Beverage Practice Leader at Technomic. “People don’t choose where to go based solely on the beverage program, although it might make a difference at a place like BJ’s Brewhouse or Rock Bottom, however, it can be a primary differentiator once you’re in the establishment.”

An analysis of the Technomic Top 500 list found 245 of the concepts offered spirits, wine and beer, and those alcohol beverages generating 9.7% of sales on average. For those 245, the beverage alcohol sales for the 50 full-service chains sales were identified (download chart here).

Traditional casual conceptes, such as Chili's and T.G.I. Friday’s average 14.1% of sales from beverage alcohol, while concepts billed as contemporary casual by Technomic, such as Bonefish Grill and The Cheesecake Factory, realize 17.6% of sales from spirits, wine and beer on average. For upscale chains, including Morton’s The Steakhouse, The Capital Grille and Fleming’s Prime Steakhouse, the average is 26.4%. “The higher up you go on the average check, the more higher priced drinks and bottles of wine you see going out to the guests, so the higher the percent of sales from alcohol,” Henkes observes.

Looking at broader industry metrics, Henkes says, “Clearly, the overall growth is in contemporary casual places that highlight a great atmosphere involving high energy, a cool vibe, interesting food and great beverages.” These chains, he says, are working to differentiate themselves on these elements, a strategy that is paying off. Bonefish Grill, for example, increased system-wide sales 6.6% in 2010, with alcohol approaching 25% of sales.

Others among the Top 50 to note are Tilted Kilt, which is on a fast-growth track and features a strong beer program. Bar Louie boasts a robust cocktail program, and although overall sales slowed in 2010, the chain maintains beverage alcohol sales at more than 30% of total revenues. Management at several chains, including Applebee’s and the Brinker concepts, are now sharpening their efforts around the bar, a trend that will positively impact overall unit sales as well as the adult beverage supplier community due to the sheer size of those operations, according to Henkes.

Looking forward, Technomic projects a challenging year ahead in 2012, but Henkes offers this advice on creating a strong point of differentiation through adult beverages: “Make sure there is a corporate focus on beverage. Restaurants exist to sell food, so innovation is often focused there and beverages are secondary, but to fuel growth, a chain needs innovation, focus and attention on beverage.

“Recently, a lot of chains have shed their beverage people and have gone in a different direction, which is unfortuante and numbers show the impact,” he adds. “The trend this year and into next is not just mixology, but having an educated and attentive bartender. Drink-making skills have their place, but a knowledgeable and professional bartender and bartending staff can make a difference in the casual segment. To make that happen, a chain needs dedicated beverage management in place.”

In many chains that responsibility lies with one person, typically supported by resources from marketing, operations and training. Given that beverage can generate anywhere from 10% to upwards of 30% of sales, that’s a huge impact on the business by one indivdual.

Click here to download a pdf of this chart. 

Technomic Top 50 Chart


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