With 2012 barely underway, VIBE checked in with three members of the VIBE Advisory Council to get their take on how 2011 ended for them, and the factors that will influence the beverage business in the year ahead. Our first VIBE VAC Roundtable took place in early January, and participants included Edithann Ramey, Senior Director of Marketing for Chili’s Grill & Bar (Brinker International); David Morgan, Vice President, Food & Beverage at Omni Hotels; and Ryan Valentine, Director of Beverage at Cameron Mitchell Restaurants.
In this installment, these leading operators discuss the role of value in 2012, as well as hot drink trends and emerging technologies. The Feb. 6 issue of VIBE will include their discussion of social media, vendor relationships and their expectations for the upcoming VIBE Conference. Our thanks to these VAC members for sharing their insights.
VIBE: Consumer confidence rose in the fourth quarter of 2011, and “consumers are more optimistic that business conditions, employment prospects, and their financial situations will continue to get better,” stated the Conference Board. Did you see evidence of that in your restaurants and, specifically, at the bar?
David Morgan: This was our strongest New Year's Eve at our outlets in years. One reason is that it fell on a Saturday; another is that there was evidently pent-up demand. People wanted to come out and celebrate. We did a tremendous level of volume, the best in years. We did do heavy marketing against it, but I’m not sure what portion of the volume was due to marketing effort, the pent-up demand or the fact that it fell on a Saturday.
Ryan Valentine: Yes, it was a gigantic New Year's Eve for us, as well. I attribute a portion of that to it falling on a Saturday, also. Most of our stores had their best New Year's Eve ever. It being on a Saturday, plus demand and the fact that we did a good job on reservations were indeed the drivers. We executed very well on the guest service aspect.
Edithann Ramey: Quarter four was good for Chili’s. We saw year-over-year increases in liquor sales for a few reasons. We have been advertising in the digital space, which is having an impact. The re-imaging initiative, which involves our bars, is another element. So, the combination of people coming back to the bar, feeling good and our innovation at the bar drove good results.
VIBE: In light of that consumer optimism, how important will value be to your guests in 2012?
Valentine: I don’t think the demand for value will ever go away. Even with the economic trends, people are so much more sophisticated in their dining out habits, partially because there is so much food on TV and in the media in general. They just know more! We are very conscious of everything we’re doing on the guest-satisfaction front, but costs will be our biggest challenge to delivering value this year. The guest’s perception of value is huge; they know more, they expect more, but they also want to spend wisely. The other piece of the value scenario that we spend a lot of time on — because we are convinced only a portion of value perception is based on price — is the overall experience. You really have to address all different areas where value comes from: quality of the server, quality of the products, quality of the appearance of the drink, everything.
As for food costs, we’ve been stubborn behind the bar, and not compromised, not backed off of the pedigree spirits and fresh ingredients we use. We’re sticking to our guns because we’ve spent a lot of time building quality reputation and are afraid of consequences if we did back down.
Ramey: For Chili’s, it’s a little bit of engineering and thinking about balance. To deliver great taste at national level, at 1,300 restaurants, it’s crucial that everything tastes great. With food costs trending the way they are, we have had to get clever about ingredients and develop recipes with great costs and great taste. And with fresh ingredients involved, we do engineer recipes that have good food costs, although some do require incremental traffic to be successful. The key is to be smart about building recipes that taste great, but carry good food costs.
We’re now more focused on value as far as the experience vs. just price-price-price. You can’t get too crazy on discounting. We rolled out the Platinum Presidente Margarita in Q2 , shaken at the table with a beautiful shaker; the experience is perceived as a great value to the guest. It’s performing well. We track guest perception of value for drinks and are getting high marks: The price-value equation is working on the Platinum; [the guests] think it’s worth the money. So it all fell into place: something new, priced right, tastes great.
Morgan: From the perspective of what Ryan said, value isn’t going away. But costs are a factor now. For us, freezing commodity costs has allowed us to look at how we use ingredients. We’re working to be more aware of what’s happening in commodity markets, and changing the way we use ingredients.
VIBE: We’re now a few weeks into 2012. How are sales trending?
Morgan: You know, it’s interesting. From my observation, as great as New Year's Eve was, our stores in Dallas, for example, are off to a slow start for 2012. Compared with the same week a year ago, we have slowed a bit. I hate to push the panic button right away, but the first 10 days or so were a bit slow.
Valentine: Yes, we’ve also seen a let-down from the holidays, but it hasn’t been disappointing, per se. We are where we were forecasting for this time of the year. But with consumer confidence picking up, so should our restaurants.
VIBE: Skinny cocktails, craft beer, barrel-aged cocktails, Sangria, local/organic libations, boutique spirits — what trends of 2011 will continue into 2012? What trends do you see taking shape for 2012?
Morgan: Sustainable food has been and remains something we’re focused on, as well as regional components. People are more educated, and while we look at the food perspective, we also need to continue to look at beverages. We’ll continue our regional cocktail program of craft cocktails that involve regional flavors and ingredients. People today understand and expect that level of focus and quality. We’re also seeing more with punches, which is a trend that started in ’11, and are finding traction with punches in banquets. We needed a cocktail that would work well in catering/banquet in 2012, and punches are shaping up to be that.
Ramey: As large as Chili’s is, it’s hard to jump on the latest and greatest trend. For example, we played with skinny Margaritas last year and had to step back, optimize the recipe and bring it back on in Q3. That’s the nature of the beast.
One platform we’re excited about and are building on in 2012 is fresh. The use of fresh ingredients behind the bar has been out there for a bit in many chain-restaurant companies, but with so many locations and bartenders to educate, we’re just rolling it out now. On a Saturday night with so many people in the restaurant, it’s really difficult to ask bartenders to squeeze juices at the bar. So we had to be creative about how we execute on fresh.
Valentine: Skinny we didn’t really dabble in, but what we turned to was new spirits, the artisan spirits. That bubble will get bigger and bigger and then pop. So many are hitting the market right now, and so many are not very good. Those that are good and have a good story will last. Punches, I predict, are going to continue to grow, and we’re seeing the more expensive wines moving a little bit more. Of course, it’s not the super expensive selections, but the guests are beginning to trade up and going part of the way back to where they were a few years ago. It’s definitely time to be somewhat optimistic, because we’re seeing things we haven’t seen for a while.
VIBE: What technologies do you foresee driving the drinks business in 2012?
Valentine: One thing, and it’s not new to us, but it just becomes more important every day, is the inventory system. All our stores have big beverage inventories, so we use an Accubar inventory control system where you can scan all the bottles — it’s amazing the amount of stuff they’re counting — and managers can be more accurate and more efficient. They’d cry if we took it away from them! With this system they can get their arms around their inventory.
Morgan: We’re looking at iPad applications and anticipating that they’ll evolve to a point where you go into our steakhouse, put your name in and pull up your wine history. Today, you get an iPad with a button that tells you about the wine/food pairing. That’s now the cost of entry. We’re looking to go toward knowing what you like, cross-referencing that with what’s on the wine list and getting into making highly personalized recommendations. We’re just starting to see that evolve in very interesting ways.
Ramey: There is some experimentation going on in our system. For example, we have a franchisee in Chicago who is testing a unit that allows the guest to order directly from the device, so you don’t have to rely on the server to talk about drinks. The guest can make a decision based on the picture and drink description. It’s very expensive. The hope is that is becomes more robust and more cost-friendly. Right now, it’s attached to the table, sitting off to the side and looks like a small computer screen.
Be sure to look for the next installment of the VAC Roundtable in the Feb. 6 issue of VIBE!