(Cautious) Optimism Abounds for On-Premise IndustryFebruary 8, 2010 By: Donna Hood Crecca
Beverage pros are optimistic about 2010, according to a recent survey of beverage industry pros conducted by BEVFORCE, a career network, and BevNET, an industry media firm. The online survey of more than 1,000 individuals involved in the beverage alcohol and non-alcohol drink businesses — including wholesalers, distributors, suppliers, retailers and service provides — found that hiring rates will remain consistent but layoffs will be fewer this year. In fact, 75 percent of respondents reported feeling “secure” in their employment, 67 anticipate hiring additional staff and 75 percent foresee growth in 2010 for their companies. One quarter of participants said their companies had layoffs in 2009.
Although a variety of economic indicators are thrown around as signals of recovery from the recession, anyone who has been in this industry for some time knows the crucial indicator for restaurants is unemployment. People who are employed and feeling secure in their employment are more likely to go out to eat and spend more freely when they do so. The fact that beverage pros are optimistic about their own job security, coupled with DISCUS’ recent forecast calling for a revival of on-premise spirits sales and NRA’s projection of 1.2 percent dollar growth in full-service restaurant sales this year, should lend some confidence to restaurant beverage execs.
Two challenges face restaurant bev execs, however. One is the fact that consumers are now conditioned to expect “deals” in the form of value offers, whether it be bundled meals or discounted happy hour drinks and apps, and they’ll continue to look for those offers throughout this year, even as their comfort level with spending rises. Creative promotions that speak to value but also deliver dollars to the bottom line are the only way to succeed with the guest and with your CEO.
Secondly, many chain restaurants have reduced their beverage staff and resources, some even to the point of eliminating the position of beverage director. My advice? Make the financial case for supporting beverage. Adult beverages generate anywhere from 10 to upward of 30 percent of sales in chain restaurants, according to Technomic [Link to Profits by the Glass], with a high profit margin, so the case is rock solid. Sparking beverage sales can spark overall company performance.
I myself am more than cautiously optimistic about the year ahead. I see a lot of creativity out there and a consumer eager to relax and let loose a little after two years of worry. Keep checking in with VIBE — both the newsletter and the VIBE Conference [LINK] —for more ideas, insights and info to help you succeed.