Good News for Beverage ExecutivesJuly 26, 2010 By: Donna Hood Crecca
Beverage execs will want to note two positive developments. The first is that Technomic recently updated its forecast for alcohol sales in bars, restaurants and nightclubs. At the end of 2009, the Chicago-based firm projected on-premise drink sales to decline 2.5 percent this year; last week, it announced its expectation that sales will increase 1.1 percent in 2010. The reason for the upwardly adjusted forecast?
“Our expectations for segments like casual dining, fine dining and bars are much higher than they were six months ago,” stated David Henkes, vice president at Technomic and the director of the firm’s on-premise practice. “Consumers are returning to restaurants, and that’s good news for the sales of alcohol and related products.” Henkes points to beer and cocktails as the likely beneficiary of the increased traffic, and anticipates wine sales will continue to lag due to consumers trading down or ordering by the glass instead of by the bottle.
The two on-premise segments expected to see the greatest growth this year are bars and nightclubs (2.1 percent increase projected) and casinos (also 2.1 percent), followed by lodging and concessions (both projected to see 1.3 percent growth); fine dining drink sales should increase 1.1 percent, while spirits, wine and beer sales in casual dining is forecasted to decline 0.5 percent.
The second trend involves employment, an indicator that many industry pros point to as the driver of on-premise traffic. Unemployment in June came in at 9.5 percent, down from 9.7 percent in May. While analysts remain concerned about the rate of long-term unemployed and job creation, within the restaurant industry, there are signs of increased employment and new positions available. The People Report Workforce Index found restaurant companies’ employment expectations rising to levels not seen since the onset of the layoffs and hiring freezes brought on by the recession. The quarterly index survey conducted by the Dallas-based workforce benchmarking and trend tracking firm found 42 percent of companies expecting to hire more hourly workers and only 5 percent expecting to reduce staff; none of the 50 companies surveyed anticipated reductions in management staff. In addition, those surveyed reported increased difficultly in recruiting new employees and expected job growth in the third quarter.
While these trends are all positive, they do point to a need to continue offering value, whether it be in quality drink programs and stellar service to the guest or a great value proposition to attract and retain employees to deliver that level of guest satisfaction. Happier days may be on the horizon, but they’re not here yet. The savvy operators who focus on the guest and the employee experience with equal fervor may see them sooner.