Casual dining looks to bar to shake up salesCasual dining looks to bar to shake up sales

Yard House has long been known for its beer offerings, but now it is turning its attention to cocktails. Photo: Yard House

As casual-dining players battle to rev up flagging same-store sales, many are overhauling their bars with a renewed focus on craft beers and fresh, seasonal cocktails.

For years, the casual-dining segment has been losing market share to the growing fast-casual sector, especially to value-focused bar-and-grill concepts.

But one aspect of casual dining stands apart from fast-casual competitors, according to Wyman Roberts, president and CEO of Chili’s parent Brinker International Inc.

“We know the biggest differentiator between casual dining and fast casual is the bar,” Roberts said in January while outlining a planned overhaul of Chili’s bar business during a call with analysts. 

Brands like Chili’s are increasingly honing in on what Roberts described as the “new school” thinking of today’s consumers, with their love of local and fresh ingredients, their desire for relevancy and authenticity, and their penchant for social dining. Just as those ideas are being translated to food menus, they must also be applied to the bar, he said.

Some casual-dining players are looking to chains like BJ’s Restaurants Inc., which boasts an alcohol mix in the mid-20-percent range — quite a bit higher than average for the segment.

Casual-dining chains averaged about 12.6 percent in alcohol sales in 2015, according to data from market research firm Malcolm M. Knapp Inc., whose Knapp-Track tracking service focuses on casual-dining sales trends.

However, that does not include beer-focused concepts like BJ’s, which would likely push the average to about 14 percent, Knapp said.

Craft beer clearly has a higher sales growth rate than traditional beers, he noted. “That’s a sweet spot in the market. Younger guys in particular want more flavor.”

However, Knapp said that the real growth in recent years has been in spirits, which have increased in sales over the past five years, while beer and wine have declined.

Looking at the breakdown of alcohol sales alone in casual dining, spirits accounted for about 43.6 percent in 2010, and increased to 45.7 percent in 2015.

Beer declined from 31.1 percent of alcohol sales in 2010 to 30.9 percent last year, but Knapp noted that the decline was largely due to a slide in traditional beer sales offset by the rising popularity of craft beer. 

“It would have been much worse if not for craft beer,” Knapp said.

Meanwhile, wine accounted for 25.3 percent of casual-dining alcohol sales in 2010, and has dropped to 23.6 percent in 2015, according to Knapp-Track.

“Cocktails have really become the big deal, and it’s the flavors you can get,” Knapp said. “You’re seeing a lot more emphasis on interesting drinks with interesting flavors that have a story you can tell. People love drinks with a story.”

Yard House cocktails get fresh

Yard House, based in Irvine, Calif., has long been known for its broad menu of draft beers. The 63-unit chain owned by Darden Restaurants Inc. is also one of the strongest in casual dining in terms of bar sales, with an alcohol mix of roughly 35 percent.

Unsurprisingly, beer is the top seller, but over the past year Yard House has been reworking its cocktails with innovative drinks featuring fresh ingredients like pomegranate seeds, blood orange slices, seared jalapeños and housemade clover honey syrup.

And spirit sales are climbing, said Greg Howard, Yard House manager of beverage.

Yard House was originally founded as a beer and martini bar. When Howard started at the chain about a decade ago, Yard House offered 25 martinis and cocktails that were mostly vodka- or rum-based with a fruit mixer, or maybe a cordial or schnapps mixed in, he said.

“Things have changed dramatically,” Howard said. “Consumer habits are changing. Millennials are making the whole landscape more complex.”

A key component is the desire for fresher and higher quality ingredients. 

“Processed, pre-made syrups and salt-rimmed glasses aren’t enough anymore,” he said. “People are more cognizant of what’s going into their drink.”

In February, Yard House rolled out a new line of cocktails, such as the Midnight Sangria, a honey-melon-sweetened red sangria with Hennessy VS Cognac and pinot noir served in a large goblet garnished with a blood orange wheel and sprinkled with fresh pomegranate seeds.

Another example is the Refresher, made with Prairie Cucumber Vodka with St. Germain Elderflower, a housemade citrus-agave blend, fresh watermelon juice, cucumber and lime. The drink is topped with a splash of prosecco and served in a tall cooler glass.

“We got rid of the pre-made sweet-and-sour last year and started using a housemade citrus-agave blend,” Howard said. “What’s interesting is the batch mix we make is actually cheaper than the sweet-and-sour mix we were buying that wasn’t all natural and didn’t have the flavor profile we wanted. So when you go quality and fresh and handmade, it doesn’t necessarily equate to higher costs.”

Additionally, Yard House is serving cocktails based on a broader spectrum of spirits, rather than just vodka. Of the 10 cocktails introduced since July 2015, vodka was the base for only one, he said. 

“Everything else has been gin or bourbon or rum or mezcal,” Howard said. “We’re trying to diversify the menu and have recipes that speak to the quality of ingredients.”

The next phase for Yard House will be cocktails on tap, Howard said, although he couldn’t elaborate.

Applebee's makes the bar a destination

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Applebee's turnaround includes an overhaul of the bar. Photo: Applebee's

Applebee’s Neighborhood Grill and Bar is also beefing up its cocktails, as well as its beer offerings.

The Glendale, Calif.-based chain owned by DineEquity Inc. is plotting a turnaround this year that includes an overhaul of the bar.

In 2015, Applebee’s upgraded its entire beverage menu, both alcoholic and nonalcoholic. Changes included the addition of more handcrafted cocktails with fresh ingredients, like Bourbon & Berries made with Maker’s Mark bourbon, cranberry and lemon juices and fresh blackberries; and the Fresh Fruit Citronade made with Absolut Citron Vodka, strawberries, basil and lemonade, with a sprinkle of black pepper.

The beer platform has been reworked to include more “hyper local” craft beers, as well as nationally recognized craft brands, alongside classic labels.

The design of bar areas has also been tweaked with new fittings, electrical outlets so customers can charge their phones, flat-screen TVs, and improved music and lighting.

The bar staff has new uniforms, and a new bartender certification program to be rolled out by fall 2016 aims to raise the level of service.

“We want our bar to be a destination, versus just a convenience when guests are dining with us,” said Sanjiv Razdan, Applebee’s chief operating officer.

DineEquity doesn’t reveal the percentage of sales that comes from the bar at Applebee’s, but Razdan said the chain definitely has an opportunity to take it higher.

Red Robin takes back the bar

Red Robin's rebranding includes an emphasis on "brews." Photo: Red Robin

Red Robin Gourmet Burgers and Brews has been refocusing on the “brew” side of the business. Last year, the Greenwood Village, Colo.-based chain added the word “brew” into its name and logo to reflect a plan to “take back the bar” as part of an ongoing brand transformation.

Denny Marie Post, Red Robin’s recently appointed president, who has headed the brand’s marketing team since 2011, noted that the chain was once called Red Robin Burgers and Spirits Emporium, and was known for its “mad mixology,” with alcohol sales in the high teens to low 20 percent. The brand’s mascot, “Red,” was a rooster with bloodshot eyes, holding a cigarette of questionable variety.

The brand later evolved to a more conservative place, she said, and bar sales dipped to about 5.5 percent. Now Red Robin CEO Steve Carley is pushing to bring bar sales back up to the double digits or low teens, but there’s work to be done, Post said. 

In a call with analysts in February, Post said alcohol sales have grown to 8 percent of the mix. 

“But we won’t rest until we are back in double digits. And we believe a focus on beer variety — after all, what goes better with a great burger than a perfectly paired beer — will get us there,” she said.

In 2015, Red Robin added more specialty brews to its menu, and the number of taps grew from six or seven to 12, although national brands remain the most popular beers, Post said.

The chain also began suggesting certain beers to be paired with burgers. Last year, Red Robin rolled out systemwide an alcoholic root beer called Not Your Father’s Root Beer. And the chain has been experimenting with pour sizes, with smaller pours of higher alcohol beers varying from the typical 16- to 22-ounce standard.

Also in 2015, Red Robin became a key sponsor of the Great American Beer Festival, which the chain saw as an opportunity to raise awareness for its craft beer.

BJ's taps passion for craft beer

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BJ’s, which celebrated its 20th anniversary as a brewer in February, has benefited hugely from consumers’ growing passion for craft beer.

Beer alone accounts for 8 percent to 10 percent of BJ’s menu mix, with other alcoholic beverages adding another 11 percent to 13 percent, company officials said during an analyst presentation in January.

The chain’s beers won two gold medals at the Great American Beer Festival last year. The Magnolia Peach won in the fruit wheat beer category, and LightSwitch Lager took the top spot among session beers.

Last year, a marketing campaign dubbed “Craft Matters” spotlighted the brand’s craft beer emphasis, appealing both to beer geeks and premium-beer-loving Millennials.

The chain includes six restaurants that are also breweries. Those breweries supply other restaurants, although some of its proprietary beer is also produced by third-party suppliers using BJ’s recipes.

Last year, BJ’s partnered with acclaimed Southern California craft brewer Stone Brewing Co. to make a limited-release Temple of Stone IPA that ran through September.

Some chains have struggled with finding the right balance between a strong bar business and being family friendly. BJ’s, however, has found balance between building bar business and welcoming families in part because of the diversity of its consumer base, said Greg Trojan, the Huntington Beach, Calif.-based chain’s president and CEO.

“We are as family friendly as any other concept out there, so our ability to generate that level of alcohol and energy in our restaurants without turning it into a negative” is a tribute to the diversity of customer the 172-unit chain attracts, he said.

Chili’s returns to its roots

Brinker president and CEO Wyman Roberts sees a 20-percent alcohol sales mix within reach for its Chili’s chain.

Now that Chili’s is mostly done reimaging its restaurants, the Dallas-based company is taking a hard look at every aspect of its bar business, from design to menu items and service, he said in a recent earnings call.

Chili's adoption of tablet technology extends to the bar. Photo: Chili's

“It’s a great opportunity for Chili’s to return to its roots as a fun, casual hangout with a fresh, modern twist,” Robert said.

At Chili’s, the alcohol mix is around 14 percent, above the industry average, he noted. But looking at competitors with a 20-percent mix, he said, “We think that sets some of the benchmarks where we could take our bar.”

Few details have been released, but Roberts said the chain will build on its already strong margarita platform, which dovetails with the emphasis of late on fresh Tex/fresh Mex on the food side of the menu.

Expanding craft beers and the beverage promotional calendar will also be part of bar upgrades, he said.

Chili’s is looking to reenergize the bar atmosphere with a more social design, enhance service by bartenders, and focus on the dedicated bar menu.

Knapp said the bartender can be a key aspect many casual-dining players miss.

“There’s a big premium in having a really good bartender,” he said. “Bartenders have followings. They’re a social director in a sense. It’s an art form.”

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout