Menu Innovations | May 2013 | By Amy Sung

Buying into Booze

Does the future of fast casual lie in alcohol?

Fast casual brands attract customers with alcoholic beverage programs
Freebirds has each found success in offering alcoholic beverages on the menu. Freebirds World Burrito
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Fast-casual restaurants were once able to claim premium food, modern décor, and all-around upscale service as hallmarks of their category. But with more quick-service chains retooling in those areas to compete for post-recession consumers, fast casuals have been left to search for new ways to differentiate their brands.

For many, that search has turned up something typically better suited to fine- and casual-dining joints: booze.

“We’re seeing a fair amount of it within fast casual; traditional limited service, not so much, although Starbucks obviously has been testing it,” says David Henkes, vice president of Chicago-based Technomic Inc., adding that alcohol can account for 3–7 percent of a fast casual’s sales. “For fast casual, it is a lot more in their wheelhouse than in traditional fast food.”

At Blaze Pizza, based in California, beer and wine sales alone account for about 2 percent of sales, but president Elise Wetzel says food purchases with beer and wine sales account for another 3–5 percent. “Our estimate is that sales of beer and wine can boost our top-line sales by 5–7 percent,” she says.

Fast casuals aren’t just adding alcohol to steal back quick-service customers. Alcohol programs can eliminate the veto vote, in which patrons choose not to dine at a certain restaurant because it doesn’t serve alcohol.

Pierre Panos, chief executive officer of Atlanta-based Fresh To Order, says he hopes to push alcohol sales to 10 percent at locations where it’s served. Several Fresh To Order units serve beer and wine, while a new location just opened in Emory Point, Georgia, with a full bar.

The full bar removes the veto vote for nearby Emory University students, Panos says.

“We also want to further legitimize our excellent dinner offerings with alcohol, in order to reinforce that we are a solid choice for dinner,” he says. “My goal is to get [Fresh To Order] to a 50/50 lunch/dinner mix from our current number of close to 40 percent [for dinner]; the full bar will go a long way toward this.”

While alcohol can improve sales and daypart opportunities, experts say fast casuals must consider the various ways in which it can change the brand before rolling out their own programs.

The differentiator

Henkes says alcohol doesn’t just give customers a reason to choose a fast casual over a quick serve, but it also gives customers a reason to choose a fast casual over casual-dining restaurants.

Alcohol can also be an attractive menu option for several customer demographics, including Millennials, who have become an increasingly important consumer base for the fast-casual industry. A recent Technomic study, “Understanding the Foodservice Attitudes & Behaviors of Millennials,” found that 41 percent of Millennials purchase food away from home at least twice a week, compared with 38 percent of Gen X-ers and 37 percent of Baby Boomers. Meanwhile, 20 percent of Millennials also agreed that it’s important for restaurants to serve alcoholic beverages, compared with 12 percent of Gen X-ers and 10 percent of Boomers.

“Millennials certainly index a lot higher when it comes to fast-casual usage, and they’re much more likely to experiment with different kinds of drinks,” Henkes says.

Still, only 26 percent of all limited-service restaurants offer any type of alcohol, says Maeve Webster, senior director of Datassential, a market research firm. “So offering any type of alcoholic beverage—whether that’s beer, wine, or something else—in that segment is going to set the operator apart,” she says. Further, “of the [alcoholic] beverages offered, nearly 90 percent of all options are some type of beer or wine. Offering cocktails or some non-beer or wine options is going to set you apart even more so.”

That’s one of the reasons Fresh To Order’s full bar serves liquor, including specialty cocktails that will change with the season. This past winter, it offered two hot drinks, including Açai Honeycomb, a mix of VeeV Açai spirit, honey water, and fresh lemon.

“Serving craft and seasonal liquor is once more a further differentiation, as almost no fast casuals offer a full bar. If they have beer and wine, it is almost an afterthought, and the sales reflect it,” Panos says. “The bar now offers our guests that extra enticement and touch point to come into our restaurant.”   

The core concept

Fast casuals are always working hard to know their customers and identify their core concept. Implementing an alcohol program, the experts say, requires the same amount of due diligence.

Henkes says that because fast casuals have a more upscale image than their quick-service counterparts, they often skew toward more upscale alcohol choices, like craft beer. He says many chains will also use their alcohol program to complement what they’re doing with food options.

“Chipotle obviously has Corona, and I think they have some domestics, too, but their big thing is Corona,” Henkes says. “Smashburger’s been really focused on offering craft beers, so I think the general expectation is that it’s going to be a higher-quality beer or more of a craft or an import. But it definitely needs to match the menu orientation and sort of the quality tier that that fast-casual chain is going after.”

Atlanta-based Uncle Maddio’s Pizza Joint, which does 2–4 percent of its business in alcohol sales, serves bottled and draft beers in its stores, as well as wine. Cindy Wahl, field marketing manager for Uncle Maddio’s, says the brand tries to shape its alcohol selections around its local communities. For example, because some stores have a large following of customers who order gluten-free pizzas, it now offers a gluten-free cider among its alcohol options,
she says.