The FSR segment is losing ground to quick and limited-service restaurants, but creative, value-driven beverage programs can help arrest the trend
By Sophie Mir
Full-service restaurants are struggling to flourish in today’s foodservice market. In fact, according to Technomic’s 2019 Top 200 Canadian Chain Restaurant Report, both full-service location and sales growth have slowed down in the past three years.
This deceleration can be attributed to several factors, including losing market share to limited-service competitors and new emerging channels, such as “eatertainment” concepts and food halls. Fast-casual and quick-service restaurants continue to outpace full-service concepts in sales growth with fast-casual and quick-service’s year-over-year sales growth up 12.6 per cent and 3.7 per cent in the last year, compared to casual dining’s 2.4 per cent. In addition, emerging concepts such as eatertainment venues and food halls are luring consumers away from restaurant chains by offering greater entertainment value and a larger variety of dishes and flavours, respectively.
Not only are FSRs battling for business with other concepts, but they’re also struggling to get customers physically into their doors. The uptick in delivery solutions is one reason, with over half of consumers (58 per cent) agreeing that it’s more convenient to order food for delivery than for carryout, according to Technomic’s 2018 Canadian Off-Premise Consumer Trend Report. The popularity of delivery speaks to the growing “let’s stay at home and Netflix” trend, in which flexibility and convenience are prioritized over a formal restaurant experience. To incite consumers to dine in at restaurants, full-service operators will need to evolve the dining experience, offering foods, beverages and an overall social experience that better compete with off-premise.
One way operators are marketing the in-restaurant experience is by emphasizing and reinventing their adult beverage selections, which have some of the highest profit margins in restaurants. According to Technomic’s 2017 Adult Beverage Canadian Insights Report, adult beverage consumption from foodservice remains strong, with over two-fifths (41 per cent) of consumers reporting that they purchased an adult beverage during their last restaurant visit. Because alcohol beverages are a key part of the dining experience, operators are finding ways to profit more from adult beverages, both by luring new customers and developing loyalty among regular customers. Let’s delve into six major adult beverage strategies that operators are using to maximize revenue.
Food and (mostly) Beverage
With almost half of consumers (44 per cent) stating that offering foods they like is an important attribute when deciding where to purchase a beverage, according to Technomic’s 2018 Canadian Beverage Consumer Trend Report, full-service operators are promoting popular alcohol drinks with fare favourites to appeal to customers who may be interested in an expertly paired drink and bite. For example, Symposium Cafe, a leading full-service growth chain, offers a martinis-and-mussels pairing special on Wednesdays, and Delux Burger Bar spotlights a beer-and-slider combination deal once a week. By providing a curated pairing option that is not as easy to formulate at home, operators are attracting consumers to dine in at their restaurants for both food and drink, resulting in higher check averages.
Happy Hour and Bar Deals
Value-driven specials are becoming increasingly significant to consumers, with over two-fifths expressing it is important that traditional casual-dining restaurants (43 per cent) and upscale casual-dining restaurants (41 per cent) offer promotions and special deals. Moreover, according to Technomic’s 2019 Canadian Future of FSR Consumer Trend Report, consumers also report that prices being too high is the top deterrent in visiting full-service restaurants.
Operators are responding to this demand for lower prices and better deals by launching happy hour specials. For instance, Scaddabush, a leading full-service growth chain, offers two kinds of happy hours: after work (from 3 to 5 p.m.) and late-night hours (from 9 p.m. to close). Specials include $5 sangrias and Aperol spritzes, as well as $8 cocktails. Lone Star Texas Grill also provides two happy hours during the weekdays: one during the day (from 11 a.m. to 5 p.m.) and one late at night (from 9 p.m. to close), spotlighting reduced frozen margaritas, beer and well drinks. By offering happy hours throughout the day, operators draw in consumers to dine in during off-peak hours, gaining new customers who don’t usually stop by after work hours.
In addition to happy hour specials, concepts are also highlighting daily drink specials. For example, Cactus Club Cafe offers 50 per cent off all bottles of wine on Tuesdays and Wednesdays. Knowing that consumers love a deal, operators are and should continue to provide these beverage promotions to attract customers who may be thriftier, especially younger ones.
Beverage Tastings and Other Alcohol-Driven Events
Holding alcohol-related events, including tastings, is another way that full-service concepts are attracting customers to dine in. Since about half of consumers report that they visit upscale restaurants to celebrate special occasions (60 per cent) or treat themselves or others (46 per cent), operators are showcasing and promoting their alcohol knowledge and experience as a distinct form of entertainment.
For example, Midfield Wine Bar in Toronto regularly holds “Meet Your Maker” events where winemakers from various global regions gather for an interactive wine tasting occasion in which guests can try new wines and mingle with wine experts to receive a fun-filled education. In addition, Sorrentino’s holds ethnic-inspired cooking classes that include ethnically appropriate alcohol beverages for the event. Operators should continue to add wine tastings and cooking classes to their restaurant programs, offering consumers a different reason to visit their restaurants.
Wow-Factor Alcohol Drinks
Full-service operators are enticing customers with craveable alcohol beverages that not only taste good, but are also visually striking. With some 40 per cent of consumers expressing it is important that full-service restaurants offer signature items that they can’t get elsewhere, operators are concocting limited-time or feature beverages that often have dramatic colouring or effects that are hard to replicate at home.
For instance, Jack Astor’s Bar and Grill offered colourful Unicorn Bellinis this summer that are made with “unicorn tears”, adding a photo-worthy option to its adult beverage menu. Further, Applebee’s menued strawberry margaritas that came with a Twizzlers straw this spring, which was not only Instagrammable but also nostalgia-inducing. To gain consumers’ attention, concepts should promote these eye-catching drinks on their online and in-store menus and signage with high-definition pictures and use social media as a marketing tool to provide further details of these typically uber-limited-time drinks, including trendy ingredients and flavours and how long they’re available.
As brunch grows popular as a daypart, especially among women and younger consumers, restaurants are enhancing the brunch experience by menuing alcohol beverage specials. For instance, Earls Kitchen + Bar launched a brunch happy hour last year, marketing it as “all the motivation you’ll need to get up and get out earlier on weekends.” Select feature drinks include mimosas and spiked coffee with Baileys liqueur. By incorporating morning alcohol favourites on brunch menus, full-service restaurants are able to gain a new kind of customer, those who may not enjoy evening dining but still would like an alcohol-driven social experience. This results in increased traffic in a daypart that traditionally doesn’t get high check averages from adult beverages.
Full-service restaurants are infusing excitement into their adult beverage selections by not only offering creative twists to alcohol drinks and offering stimulating alcohol-related events, but by also highlighting inventive mocktails as an alcohol alternative.
U.K. brand Seedlip has seen rapid growth in menu mentions in the past year, rising 100 per cent on restaurant menus, per Technomic’s Ignite menu data. Marketed as the world’s first non-alcoholic spirit, Seedlip is popping up in trendy mocktails to appeal to non-drinkers who may want to dine in at restaurants for the drinking experience, but without the alcohol. With a third of consumers, including some 41 per cent of younger consumers ages 18 to 34, reporting that they would be likely to purchase mocktails that taste like they contain alcohol, concepts are and should continue to add Seedlip-infused mocktail options to draw in non-drinkers and help avoid the veto vote. For example, Ki Modern Japanese + Bar in Toronto offers its clementine fizz, made with Seedlip Grove, clementine juice and iced orange tea. Besides including Seedlip, operators can also innovate their non-alcoholic beverages to taste and look like alcoholic drinks by creating and featuring house-made spiced syrups or other concoctions that have similar flavours to certain spirits, such as a juniper-infused syrup that is reminiscent of gin, and presenting them in traditional cocktail glassware.
Out-Innovating the Competition
Innovation around alcohol beverages continues to carve new opportunities for full-service operators to gain new patrons and retain old ones, as they face increasing competition from other foodservice avenues. With over a third of consumers agreeing that they are more likely to visit an upscale (43 per cent) or traditional (34 per cent) casual-dining restaurant if it offered a wider variety of alcohol beverages, operators should explore various strategies to diversify their alcohol beverage menus and alcohol-related events to enhance the overall drinking experience. Restaurants that find creative ways to market their alcohol beverage selections will not only gain an edge over other full-service and limited-service concepts, but will better compete with emerging channels that are developing as threats.
Sophie Mir is an Associate Editor for Technomic Inc., a Chicago-based foodservice research and consulting firm. Technomic provides clients with the facts, insights and consulting support they need to enhance their business strategies, decisions and results. The company’s services include publications and digital products as well as proprietary studies and ongoing research on all aspects of the food industry.