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The Dubious Wisdom of Chains Restructuring Beverage

April 1, 2009 By: Donna Hood Crecca

In the last several months, two major chains have placed beverage under the auspices of marketing. One, Applebee’s, eliminated the Beverage & Operations Development post held by the incredibly talented Rich Shuey, and placed beverage alongside marketing, under the direction of the also talented Brian Masilionis, who now holds the title of Manager, Beverage & Brand Marketing. Essentially, beverage is being run by the food team at Applebee’s Service Inc.; the move was made as part of the Applebee’s shift to being predominantly a franchised brand.

Another major casual chain operator, Brinker International, transitioned beverage into marketing a little over a year ago, with director of marketing Scott Zaleskin overseeing drinks at Chili's and On The Border, and director of marketing Edithann Ramey doing so at Maggiano's. Other chains are also repositioning their beverage resources as they juggle their overall structures in these trying times.

There are pros and cons to shifting beverage in this way. Sure, tying beverage to marketing brings a key concept element — namely, drinks — into the core brand strategy. But I have to wonder if marketing folks really get what goes on behind the bar; do they grasp the art and science of a well-run bar and well-structured beverage program? General mangers in the actual restaurants are only recently coming to a greater understanding of the black whole that is the bar. If marketers lack this understanding, in this period of everyone doing more with much, much less, do they have time to really dig into bar ops and beverage programming? Nothing against Masilionis, Zaleskin and Ramey — they’re all professionals with great credentials — but is marketing where beverage belongs?

In chains, beverage can account for anywhere from 10 to upwards of 30 percent of total unit sales, which translates to significant revenue for most. It never ceases to amaze me that when times are tough, casual dining execs look to trim the resources that support one of the most profitable components of their restaurants: drinks. Beverage alcohol builds checks, builds revenue and enhances the guest experience. Short-shrifting it on top-level operational expertise and creating a situation where the relationships with supplier partners that lead to innovative programs must be re-built is likely to stifle potential growth, essentially leaving money on the dining table and bar.

Obviously, management teams at these and other casual dining chains are hard-pressed to find effective ways to cope with the current economic climate. I just can’t help but think about the last time some companies folded beverage operations departments — around the last major FET hike in the early 1990s. Everyone took a hit then, but those that remained committed to beverage and gave it support in the form of talent, training and programming didn’t have as difficult a time rebounding and rebuilding sales and profits. And not only beverage sales and profits, but total system sales and profits. Looks like this time around, it may again be a long way back for some.


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