Sinking drinksSinking drinks

Fern Glazer

Once upon a time customers sat down to a meal at a restaurant and automatically ordered a drink to wash it down. All operators had to do was offer a few tasty beverages and then sit back and watch as the check average effortlessly increased. 


But times have changed. 


More recently, consumers have been ordering fewer beverages, making free-flowing liquid profits a lot harder to come by.


Today’s customers are less likely to include a beverage with their restaurant meal/snack than they were in years past. Over the last five years, servings of beverages — excluding tap water — have declined 5 percent, according to new data from Port Washington, N.Y.-based market research firm The NPD Group. With total industry traffic down just 1 percent in the same period, the decline is more than recessionary cutbacks, NPD officials said. 


“The market is pretty weak for beverages, especially when it comes to traditional beverages,” said NPD analyst Bonnie Riggs. “The recession has played into it, … but there are other reasons behind it.”


The beverages taking the biggest hit are carbonated soft drinks, which have steadily declined over the last five years. In the year ended in March, carbonated soft drinks accounted for a 24-percent share of restaurant beverages, down from 28 percent in the year ended March 2006. During the same period, diet carbonated soft drinks also lost share, dropping to 10 percent in 2011, down from 11 percent in 2006. 


“Carbonated soft drinks — that’s a big loss,” Riggs noted.


Other traditional beverages that lost share include non-
carbonated soft drinks like juice, milk and traditional coffee. 


To put the soft-drink decline into perspective, in 2011 consumers purchased 846 million fewer carbonated soft drinks, a 7-percent decline from a year ago. And that figure doesn’t include diet-soft-drink numbers. 


But consumers haven’t simply stopped drinking at restaurants. Instead, many have just switched beverages, NPD found. The beverages that have benefited from the steady, long-term decline in carbonated-soft-drink servings are iced tea and specialty coffee. In the year ended in March, iced tea captured nearly 11 percent of the beverage market, up from about 9 percent in 2006. 


During the same period, specialty coffee captured a 5 percent share, up from just 3 percent in 2006. The increases largely are driven by product enhancements, Riggs said. Other beverages that have grabbed a larger share of consumers’ thirst include smoothies; slushies; shakes, malts and floats; and alcoholic beverages. Even tap water has seen a boost in share.


But while many beverages are increasing their share, it’s not enough to offset those that are declining, NPD found.


“There are some areas that are growing, but it’s a small segment,” Riggs said. “Add them all together, and they can’t make up for the losses of carbonated soft drinks.”


Both quick-service and full-service restaurants experienced declines in beverage servings, but the biggest losses are occurring at full-service restaurants, NPD discovered. While full-service restaurants account for 30 percent of total industry beverage servings, the segment contributed to nearly 90 percent of beverage losses over the last five years. The quick-service segment accounted for 70 percent of beverage servings and contributed to just 12 percent of losses. 


Riggs acknowledged that some of the quick-service losses are tied to a shift from pricier combo-meal orders to dollar-menu orders that eliminate the beverage. However, Riggs said it’s not clear what’s motivating the elimination of beverages — price, value or calorie reduction. 


While the elimination of high-calorie, low-nutrition beverages like carbonated soft drinks would seem to indicate that health is a motivator, servings of beverages such as milk and juice, which both have noted health benefits, have not increased. Further, she noted that while the recession likely is behind the increase in orders of tap water, it certainly doesn’t explain the uptick in alcoholic beverages over the last few years. As a result, NPD is planning an in-depth study to determine the whys behind the trend. 



Drink orders


While it seems that the heyday of low-cost, high-profit soft drinks is behind us, that doesn’t mean that beverages can’t still be a serious boost to restaurant check averages. It just might take a bit more effort, even flair, to get consumers to come back to beverages, say industry experts. Here, several experts offer tips on how to inspire consumers to order up a cold one — or two — with their next meal.


• Define a strategy. To lead today’s consumers to more than tap water, operators are going to have to define their beverage strategy, putting the same kind of effort into creating beverages as they do center-of-the-plate items, say the foodservice experts at global consulting firm AlixPartners. 


“Beverage has been an afterthought,” said Molly Harnischfeger, AlixPartners vice president of foodservice practice. “Now, it’s kind of a category in itself.” One key way to differentiate, said Harnischfeger, is to “create a proprietary beverage” and feature it on the menu or table tent with a photo. 


• Bring back the “wow.” “In a lot of ways, it’s just that the choices have gotten boring,” said Bill Marvin, a foodservice guru better known as The Restaurant Doctor. “There’s no ‘wow’ to it.” While Marvin acknowledged that price has played a role in the decline in beverage consumption, he said discounts are not the way to go. To make beverages exciting, Marvin said operators must offer either unique products, creative presentation or a good story, say, about how the product was made or how it got its name. 


“Whatever you put out, think about it,” Marvin said. “If you only have Bud in a bottle, serve it in a galvanized bucket on ice.”


• Be social. Fostering fun and a social mentality is key to increasing beverage sales, said San Francisco-based restaurant consultant Andrew Freeman of Andrew Freeman & Co. 


“Fun beverage promotions can drive covers,” Freeman said. “For instance, create a one-year birthday celebration where all the guests get a splash of champagne on arrival — they are sure to order more.” Freeman also suggested pitchers and punch bowls as a great way to drive sales, noting that guests are in a party mode and usually order more than one. No matter the offer, Freeman advises operators to extend it via social-media sites such as Facebook and Twitter, which will reward online friends and drive direct traffic to the restaurant’s websites.


• Sell, sell, sell. “In order to increase beverage sales, restaurant operators must communicate more effectively,” said Linda Duke, chief executive of Duke Marketing in San Rafael, Calif. No matter how popular a beverage is, it “must be sold,” Duke said. 


“It is important to [teach servers] to up-sell and provide training for suggestive selling of beverages, from tea to wine.” Duke suggested other ways to make beverages more appealing, including such promotions as half-priced beverages on certain weekdays, free beverage samples, table signage to tout specialty drinks, partnerships with alcoholic-beverage companies and tasting events.