Beverage Industry

Promising on-Premise Sales

May 1, 2005

Promising on-Premise Sales
By ELIZABETH FUHRMAN
New products and healthier options dominate dining trends
Eating out is in. With people living most of their lives away from home, the typical American consumer now spends almost 47 percent of his or her food dollar in restaurants. This opens the door to on-premise beverages, which represent sales in everything from restaurants to nightclubs to ballparks.
Restaurant-industry sales are projected to reach a record $475.8 billion in 2005, an increase of 4.9 percent over last year, says the National Restaurant Association (NRA), Washington D.C. Full-service restaurant sales are forecast to reach $16.5 billion in 2005, an increase of 5 percent from 2004. Sales at quick-service restaurants are expected to reach $134.2 billion in 2005, an increase of 4.7 from last year. In turn, restaurant and other foodservice operators are expected to buy $73.7 billion in food and drink from industry suppliers in 2005.
As consumers continue to focus on health and diet issues, restaurants of every kind are adjusting their menus to offer healthier choices. For example, quick-service operators saw the greatest increase of popularity in entrée salads, with 79 percent reporting to the NRA they saw an increase in interest, followed second by bottled water with 69 percent. Twenty-eight percent of operators also reported an increase in popularity of iced tea and 25 percent reported growing interest in fruit juice.
Wine continues to grow in popularity at full-service restaurants, with more than half of casual-dining and family-dining restaurants and three-quarters of fine-dining restaurants, reporting that customers are purchasing more wine than two years ago, the NRA says. Both full-service and quick-service operators say bottled water, specialty coffees and iced teas are growing in popularity as well.
Demonstrating the health trend in restaurants, U.S. bottled water sales and consumption continue to rise, offering stiff competition for carbonated beverages and healthy alternatives. In 2004, bottled water volume increased to nearly 6.8 billion gallons, an 8.6 percent gain over 2003, and grew to a per capita consumption level of 23.8 gallons, compared to 22.1 gallons the previous year, according to the International Bottled Water Association, Alexandria, Va.
Still, more than one in five soft drinks sold domestically come from a soda fountain. Fountain sales have been a faster growing market than bottles and cans for the past few years, with profit margins capable of running 90 percent.
New products seem to be where soft drink companies are finding their edge and sparking consumer interest. Last year, PepsiCo Inc. partnered with Taco Bell, a unit of Yum Brands Inc., and began selling Mountain Dew Baja Blast, a turquoise-green soda with a lime flavor, exclusively at its restaurants. Taco Bell generates two-thirds of its business at its drive-through windows with an ever-growing late-night crowd. But the company realized that its customers were going home to grab a drink from the fridge, so it created a new product to attract consumers. Taco Bell expects to sell more than one million gallons of the exclusive beverage, the company says.
The Coca-Cola Co., Atlanta, continues to expand its beverage portfolio, giving consumers – even dieters and health conscious consumers – a variety of options and flavors from which to chose. Marketed toward young adults and available in June, Coca-Cola Zero offers zero calories and sugar and will be supported by an extensive marketing campaign. Coca-Cola’s seventh addition to the Diet Coke family, Diet Coke Sweetened with Splenda offers Diet Coke drinkers the taste of Splenda.
Coca-Cola also will be launching a signature beverage program with the Culinary Institute of America that helps restaurant operators create recipes using Coca-Cola to create their own unique beverages. BI
Restaurant industry at a glance
Restaurant-industry sales are forecast to reach a record $475.8 billion in 2005 – an increase of 4.9 percent over 2004.
Sales at full-service restaurants are projected to reach $164.8 billion this year, an increase of 5 percent from last year. Sales at quick- service restaurants are expected to reach $134.2 billion in 2005, an increase of 4.7 percent over last year.
  On a typical day in 2005, the restaurant industry will post average sales of more than $1.3 billion.
The restaurant industry’s sales equal 4 percent of the U.S. gross domestic product.
Foodservice operations within commercial restaurants account for approximately $437 billion of the industry’s anticipated 2005 sales. 
Source: National Restaurant Association

Spirits take flight
With growing interest in spirits and the desire to provide customers with quality unique beverages, the chef and owner of Two Chefs in South Miami, Jan Jorgensen, formed the largest back bar and whiskey collection in the Southeastern United States with more than 400 spirits products. To promote the collection and tempt customers to try new spirits, Two Chefs began offering a Spirits Take Flight series for $15 per person. Participants partake in a personalized flight of liquor – flights are selected on the customer’s personal preferences and experience – as well as individually selected food bites that complement the particular spirits being tasted.
“We plan on spending some individual time with the client and get a feel for what they like to eat,” Jorgensen says. “It will mainly be a bar promotion where you talk to a client and introduce them to 50 vodkas and then narrow it down to 10 and then eventually narrow it down to three so they can taste based on what their taste buds will accept.”
The Spirits Take Flight series features a different spirit every two weeks, such as tequilas, vodkas, rums, gins, brandies, whiskeys, ports and cognacs, and also offers customers a chance to try families of brands such as Macallan, Balvenie, Dalmore and Chieftans Springbank.
“Most of these spirits you are so used to going into a bar and saying, ‘Give me a Grey Goose Cosmopolitan.’ or ‘Give me a Johnny Walker Black.’ for example,” Jorgensen says. “A lot of people don’t open themselves up to other spirits because they are so used to calling this one brand. We figured since we have so many choices, let’s introduce them.”