Can Restaurants Satisfy Customer Thirst?
At the upcoming VIBE Conference, respected researcher Warren Solochek will present “Satisfying Our Thirst for Beverages,” during which he’ll explore how the beverage market has evolved on-premise, which beverages are growing in demand, and what drives someone to order one beverage over another. We spoke with Warren to get a sneak peek at what attendees will hear.
VIBE: What’s the most important trend on-premise as it relates to beverages right now?
Warren Solochek: If there’s softness in beverage today, it’s because of casual dining, as visits to casual dining continue to be soft. In addition, casual dining softness is being driven by the independents rather than the big chains. That’s important to note because incidence of purchasing beverage alcohol tends to be higher at independents rather than the big chains. What’s happening, therefore, is overall fewer people are going to casual dining, although bigger chains are holding their own. If you have fewer people going to independents, beverage alcohol is going to decline overall because they account for about two-thirds of all the traffic.
VIBE: What are you seeing in terms of consumer behavior?
Solochek: From a consumer perspective we’re seeing people trading down from casual dining as a whole to less expensive restaurants. The average check has gotten to a point for many people that they can’t afford to go to casual dining restaurants perhaps as often as they have in the past, spreading the purchase cycle within casual dining. People are going less often and spending less on food and beverage.
VIBE: How are chains reacting?
Solochek: Bigger chains have started to do things like promoting burgers more, or sandwiches more, as opposed to some of the more traditional center of plate entrees because they’re trying to get the price point down a bit. In fact, casual dining is moving a bit toward special occasion and away from the regular mix.
VIBE: How about beverage specifically?
Solochek: If you look at the mix, a couple of things stand out. If you look at fine dining and more upscale operators, beverages held their own there better than at traditional casual dining. The consumer going to fine dining is a little more upscale, so incidences of purchasing are doing better in fine dining. Where that growth is coming from is cocktails, which is a change from what we’ve seen in the past which was a little more wine driven. Part of what’s driving this some of the price points are getting really high for some of those premium wines and I think people look at that and ask, “Is that wine worth 12, 13, 15 bucks?”
VIBE: That makes higher priced cocktails look like a bargain and a value.
Solochek: Yes, and the other thing maybe cocktails have going for them is you have a greater ability to customize and try something really unique and different, and people are willing to try something once to see if they like it and pay it a little bit more
We’re also seeing a little softness in beer in casual dining and I think though last year was a really good year for beer, a lot of that was because of craft and I’m wondering if, within restaurants, craft is getting closer to the peak of interest, only because restaurants can only carry so many varieties. There’s a limit and maybe we’ve hit it.
VIBE: Finally, what do you see in terms of non-alcohol?
Solochek: Non-alcohol beverages are down, and that’s really being driven by carbonated soft drinks (CSDs). There’s a health factor: people are looking at things they perceive to be more healthy, like lemonade or iced tea. The other thing is CSDs have gotten really expensive at restaurants. If you’re being charged $2.50 for a glass of Diet Coke but can buy a 20-pack case for six bucks, you may not want to spend that much. Tap water has been one of the top growing beverages for several years now in casual dining because it’s cheap, obviously, and it has that healthier perception. If I’m trying to manage my spend, tap water really helps.