One disruption after another has pushed on-premise operators to the edge over the last two years, making good advice welcome as they claw back to “normal.”
Find some wisdom in these observations from seasoned observers of the on-premise beverage business.
WHAT IS INFLATION DOING TO ON-PREMISE VENUES? ANY SURPRISES?
Melanie Edwards, Senior E-Commerce and Digital Product Manager, OLIPOP Crafted Tonic:
“Price point is one of the biggest challenges on-premise beverage venues currently face. Everyone feels the effects of inflation from consumers to suppliers. The trick is to keep costs down as much as possible, while advertising the benefits of the beverages they sell. Marketing has become more important.”
Bill Meissner, President and CMO, Splash Beverage Group:
“Labor cost increases compress profitability and create strain on many on-premise operators we engage with. We’re often surprised by operators who deny these market realities are a new normal and try to hold 2021 price thresholds. We don’t see wages returning to pre-inflation levels. Consumers have adjusted their expectations and expect price increases on beverage menu items.”
Dave Parker, Founder and CEO, Benchmark Wine Group:
“Today’s top on-premise venues are challenged by the high cost of food and difficulty finding labor. Finding products with high margins and low serving overhead that also distinguish venues from competitors becomes of tantamount concern.”
Brea Wilske, Key Account Manager, Hood River Distillers:
“‘Pivot’ has become part of service industry jargon, and now it’s about the challenge of maintaining a full team. Strong industry folks have shifted lifestyles and careers, leaving an abundance of gaps and only the greenest to fill their shoes. It’s especially hard for establishments to maintain back-of-house employees. In addition to all of these shifts, service workers have to walk customers through the changes and keep them excited to come back anyway.
“There are gaps in the teams that keep the business in motion; there are gaps in distributor routes; there are gaps in steps of service to manage staffing issues, and yet people in this industry have managed to stay one step ahead of such adversity. This is the most delightful surprise of all.”
Gregory Fitch, Chief Sales Officer & SVP Sales, Hotaling & Co.:
“What we’ve seen over the past few years in the on-premise is an incredible sense of adaptability to meet the ever-evolving consumer and cultural landscape. Quite frankly, it’s been incredible to see the tremendous resilience the on-premise has demonstrated through ingenuity, resourcefulness and pure grit.”
Robert Neill, Owner, Neill Wine, Importer, Retailer, Wholesaler of Natural Small-Batch Wines:
“The post-pandemic period brought challenges beyond what anyone would ever have expected, and each has impacted equally. The loss of talented staff who haven't returned is coupled with higher wages due to merry-go-round market conditions. From head chef to kitchen porter, it’s become a matter of ‘name your price.’ This isn’t sustainable!”
HOW CAN ON-PREMISE VENUES STAY AFLOAT AND COMPETITIVE?
Melanie Edwards, OLIPOP Crafted Tonic:
“To stay competitive, on-premise beverage venues need a variety of options. During the pandemic, customers got used to carry-out and delivery. To stay ahead of the competition, don’t get rid of those options. Even though most consumers consider it ‘safe’ to dine out, they still want the flexibility and convenience of having beverages at home.”
Bill Meissner, Splash Beverage Group:
“Win the customer. As household budgets decrease, the times consumers eat out per month may decrease, making it important that those remaining occasions are spent at your watering hole. This is best done with innovative drink menus like compelling special cocktails and experiential options. For example, our three flavors of tequila are offered as a flight for the table to sip and share. This is an incremental purchase, over and above the beers or cocktails customers order individually, increasing profitability of that customer visit.”
Dave Parker, Benchmark Wine Group:
“The best way for on-premise to stay competitive is ever-changing inventory, making retailers a great resource because you don’t have to buy a full case. The venue has less money tied up in inventory while creating new, exciting wine lists that stand out. Back-vintage wines can elevate on-premise wine lists without breaking the bank. We’ve seen clients get excited about tasting the newest release alongside the same wine that’s 10 years old.”
Brea Wilske, Hood River Distillers:
“There’ve been adjustments in the community culture of restaurants and bars. Many successful establishments offer inclusive benefits packages to foster security and stability for their employees. Beyond benefits, businesses provide experiences for employee growth and knowledge, like hosting training on spirits, wine or beer, or having team outings. Teams that play together win together during service.
“Establishments are finding success with to-go programming as well. I’ve seen many procure ‘off-premise’ or retail spaces within their establishments, selling exclusive single-barrel bottle selections, cocktails, RTDs, merch and wine, reaching a new type of consumer. Keeping consumers and employees excited with innovative programs that foster learning and exploration truly seems to be a foundation of success.”
Robert Neill, Neill Wine:
“I see strong resilience in those at the “coalface” of their businesses each day, those who keep their quality focus as sharp as ever and a finger on the pulse. My advice: Avoid large menus and drink listings; avoid confusing offers and voucher schemes, and don’t compromise the quality of your wine choices, especially at the entry level.“
And if the pandemic period taught us anything, it was that we don't have to work every day. Closing two and in some cases three days a week has meant higher capacity and full restaurants on the days you are open. With shorter trading hours, overhead is better controlled. Staff are rested and have more confidence, energy and positive ideas, and customers see and feel benefits, too.”
HOW CAN ON-PREMISE VENUES BUILD ROADMAPS THROUGH CHANGE?
Melanie Edwards, OLIPOP Crafted Tonic:
“Stay innovative. Don’t get stuck in a rut. Look for new products and advanced ways to sell them. Have a creative team in place who can weather changes.”
Bill Meissner, Splash Beverage Group:
“Be purposeful about pricing and promotional planning. Each quarter introduce concepts that create engagement and loyalty, and let go of what may not be working. Avoid the labor profit-squeeze through flexible pricing and promotions. Your customers understand prices are increasing. Make it worth it to them to keep coming to your spot.”
Dave Parker, Benchmark Wine Group:
“We recently started discussing consumers pre-ordering wine when making reservations. For the most part, Benchmark Wine Group can get wine delivered within a day, so if a client requests a 1982 Petrus for their dinner later that week, for example, the restaurant could order it from us at the client's request. That allows the restaurant to have an unparalleled inventory of wine without the financial burden. A little bit of money spent on technology unlocks this capability, which could be a game changer in the industry.”
Brea Wilske, Hood River Distillers:
“Our industry was already high intensity, high pressure and high volume before the world changed. My best advice is to take care of your mind and body first. Then know your establishment's YTD goals and empower your team to execute those. Project quarterly menus and align them with supplier and distributor partners.”
Robert Neill, Neill Wine:
“Don't get hung up on popular trends, especially if you’re quality focused. Keep to lower production wines with greater authenticity, as your customers will experience the benefit in quality and value, even though prices creep up. People will happily go from £20 to £25 pounds for a house wine or entry level when the quality will be exceptional. Avoid mass-production brand names and keep to smaller suppliers who are passionate and ambitious.
“For wine and other drinks at the higher end of the price scale, keep margins tighter or pricing more competitive. This maintains repeat business from the fewer, higher spenders, maintaining volume sales at the higher end.”
FINAL THOUGHTS
Based on this round up, it looks like on-premise teams can deal with across-the-board disruption through:
- Strategic pricing and cost adjustments
- Embracing agility
- Focusing on culture, education, self-care
- Implementing creative promotions, carefully selecting products and partners
But overall, on-premise venues are showing strength and resilience, and that has everyone excited.
Carro Ford is a successful marketer, researcher and writer/reporter based near Lexington, Ky. She's worked in numerous industries and is also the author of The Smartass Marketer's Handbook: A Guide to B2B Marketing with Attitude.
Plan to Attend or Participate in the
Vibe Conference, Feb. 27 – March 1, 2023
To learn more about the latest trends, issues and hot topics, and to experience and taste the best products within the on-premise beverage community, plan to attend the Vibe Conference, Feb. 27 to March 1, 2023 at the Sheraton San Diego Hotel & Marina. Visit VibeConference.com.
To book your sponsorship or exhibit space at the Vibe Conference, contact:
Fadi Alsayegh
Sales & Sponsorships
Email: [email protected]
Phone: 917-258-5174
Donna Bruns
Sales & Sponsorships
Email: [email protected]
Phone: 936-522-6932
Charlie Forman
Sales & Sponsorships
Email: [email protected]
Phone: 845-262-1041
Connect and follow Questex’s Vibe Conference and community at Facebook and LinkedIn.