Menu Innovations | November 2012 | By Barney Wolf

How to Stay Crafty

Operators are finding that microbrews can add a local touch.

Craft beer options at quick service restaurants expand customer beverage choice.
Shake Shack's beer options. Shake Shack
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Wine connoisseurs for years looked down their noses at beer, considering the latter, better-selling beverage as a drink of the “common man.”

That view is slowly evolving, however, as an increasing number of Americans become fans of the many craft beers being brewed all across the country. And it’s an evolution that’s starting to impact quick-service restaurants, too.

While overall beer sales have declined in the U.S. in recent years—shipments slid 1.3 percent in 2011, according to industry statistics—craft beer has soared. Last year, craft breweries, which account for just 6 percent of the U.S. beer market, recorded an increase of 13 percent in volume and 15 percent in dollar sales over 2010, reports the Brewers Association, the craft segment’s trade group.

Similar growth was reported the first half of this year.

As of June, the nation had 2,126 breweries, 350 more than a year earlier. According to the Brewers Association, all but 51 of these are craft brewers, which are independently owned, traditional breweries that produce fewer than 6 million barrels of beer annually.

“There are 95 million beer lovers in the U.S., and millions upon millions of them have dabbled in [drinking] craft beer,” says Julia Herz, craft beer program director for the Brewers Association, based in Boulder, Colorado.

Among them are professionals “who are apt to splurge and trade up to the luxury of drinking craft beer,” she says. “That includes going out to eat with their families.”

Beer—which is made with water, malted grain (mostly barley or wheat), and hops for flavor and bitterness—hasn’t always been embraced by the limited-service restaurant scene. A few locations of chains like Sonic, White Castle, and Burger King have experimented in serving beer, but most U.S. quick-service restaurants want nothing to do with the beverage at this time.

That makes sense, says Warren Solochek, vice president of client development for The NPD Group, a market research firm.

“Restaurants may want to figure out how to serve beer because of the great margin implications,” he says, “but there are a number of limitations with it.”

Consumers go to quick serves “for food that has a lower check, and if you have beer, you’ve got to charge market prices for it,” he says. “So the beer may cost more than the food.”

Combine that with staffing issues and training—to check identification and observe how much is being consumed, for example—and serving alcohol can be a costly enterprise.

White Castle offers beer at a central Indiana restaurant where the company is also testing a barbecue menu, one of three new restaurant concepts. The beer includes some large domestic brews, plus a rotating microbrew.

The venerable chain is getting ready to open a second unit for each of its new concepts, but beer may not be part of the next barbecue store because it isn’t selling well.

“Beer is not something we’re aggressively pushing or pursuing,” says Jamie Richardson, vice president of corporate relations for the Columbus, Ohio–based chain.

He acknowledges that serving beer creates big challenges.

“For one, every state and county has different regulations,” he explains. “It also creates complications to the work schedule, because you need to make sure there’s at least one person behind the counter who’s 18 (the legal age to serve in Indiana).”

Starbucks has experienced different results with alcohol. As part of its growing Evenings program, which looks to provide options for customers to relax in its stores after working hours, the Seattle-based company has brought beer, wine, small plates, and snacks to select locations in several markets.

The program began in 2010 in the Pacific Northwest, expanded to a few Chicago locations this year, and will be in some Atlanta and Southern California units by year-end. It features three styles of microbrewed or imported premium bottled beer. Company officials say the development of an evening daypart is part of Starbucks’ brand evolution, and stores with the new program
have recorded increased evening sales.

Evening is a busy daypart for fast-casual chains, which have pricier menus than quick serves and provide settings geared more toward adults and relaxed family dining.

According to statistics from Technomic Inc.’s MenuMonitor trend-tracking tool, most limited-service restaurants serving beer are in the fast-casual space. And the number of fast-casual concepts doing so has grown in recent years.

Smashburger is one fast casual that has served beer, and microbrews in particular, from day one. Both draft and bottled varieties are on the menu.

“Smashburger was born with beer,” says Tom Ryan, managing partner and chief concept officer. “Before we opened the first store, we took an ‘occasion’ approach; what would be the occasions to come to Smashburger? One is for a burger with a beer.”

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