Four Developing Storms to Track: Protecting Your Drink SalesMay 16, 2011 By: Donna Hood Crecca
How will your drink sales trend this summer and beyond? You’ve got your menus, programs and promotions in place, but will they spark more sales going across the bar? The answer to those questions lies largely in how some external events and influencers play out over the next few weeks and months.
Most of us see external elements as those great unpredictable, uncontrollable influencers of our businesses, but most of them are neither (OK, flash floods are both unpredictable and uncontrollable, but that’s another column). Here’s a look at four outside forces sure to affect your bar business going forward, whether you operate in five states or all 50. If they’re not on your radar, it’s time to sharpen your focus.
Football Lockout: Straight-up bars will be hit the hardest, but full-service restaurants that rely on games to drive traffic on Sundays and Monighwill feel the pain if the NFL doesn’t resolve its differences with the players soon. Do you have a contingency plan? Buffalo Wild Wings does, and any restaurant with a television set ought to as well. Is there an upside? Well, without a Sunday game to watch at their favorite bar, some patrons may opt to dine out at a chain restaurant if properly enticed to do so…
Gasoline Prices: Predictions of pump prices breaking the $5 or even $7 in some markets this summer were rescinded in the wake of Bin Laden’s death. Crude oil prices dropped almost immediately after the events of the first weekend of this month, but unrest in the Middle East continues, meaning gasoline prices remain in play. Watch them closely, especially in your softest markets. When gas prices increase, consumers trim their dining out budgets (I drive an SUV, so I know this to be true). Value will likely remain a key driver of drink sales this summer, whether your patrons define value as quality drinks at a reasonable price or simply as low prices.
Consumer Mindset: NPD Group’s recent consumer survey exposes a widening gap in spending tendencies among consumers in the wake of the recession. Three-fourths (76%) of consumers surveyed are cautious, controlled spenders; these respondents did represent all demographic groups, but skewed toward unemployed, low-income and retirees, according to NPD. They’re reducing their restaurant visits and spending, though they anticipate increasing their usage of restaurants as the economy recovers. However, they’re not anticipating a quick recovery. The remaining 24% are more optimistic and unlikely to alter their restaurant usage; they tend to be employed. As consumers evolve into what some are calling the “have and have nots” (as in having expendable income or not), beverage directors will want to consider how product selection, pricing and service appeals to the mindset of their particular patron base and make necessary adjustments for the long haul.
CARE Act Legislation: One of the more divisive issues facing the industry, the Community Alcohol Regulatory Effectiveness (CARE) Act of 2011, is currently in committee. In general, wholesalers support the legislation, while brand marketers and retailers oppose it. The language of the proposed legislation affirms that alcohol should be regulated by the individual states and then asserts that a state may discriminate against out-of-state products if doing so is the only means of serving a legitimate local purpose. The second element re-ignited the debate about direct shipment and sparked discussion about limitations on product selection. The Wine & Spirits Wholesalers of America and National Beer Wholesalers Association are strong supporters, while the Distilled Spirits Council of the United States, Wine Institute and Beer Institute are among the industry groups that oppose it. The American Beverage Institute recently sent a letter to all members of Congress opposing the CARE Act, stating: “We respectfully urge you to oppose this anti-competitive legislation that favors the wholesale tier at the expense of suppliers, retailers and most importantly, our customers.” As a chain beverage exec, be sure to track this as it develops and also weigh in on the debate; the outcome could affect your business this summer and for years to come.
We’re all busy and doing more with less, but being proactive might mean having to do less when external forces apply pressure on our businesses. See you at the bar!