As the COVID-19 pandemic sweeps throughout the nation, and people are now being asked by their local government to stay at home, retail establishments that rely on walk-in customers are finding themselves on shaky ground.
Food service, in particular, has been forced to quickly adapt to these barren times. In just under a month, restaurants and bars across the nation have significantly reduced or stopped operations. And those that remain open have seen a 73–77% decrease in average sales, according to a recent On Premise Impact report by Nielsen CGA.
State of the (Stay-at-Home) Nation
One slim silver lining in food service is takeout and delivery. While off-premise sales have been steadily rising in recent years, they have seen a whopping 110% increase in last March alone. Out of 1,200 consumers surveyed across four states – California, Florida, Illinois, and New York – 66% ordered takeout or delivery at least once within the last two weeks.
Perhaps even more interesting is 15% of consumers are buying an alcoholic drink from the supermarket to go with their takeout. Another 15% are simply adding a drink to their takeout meal order. This behavior is even more frequent in younger markets, aged 21-34, where one in four orders includes both food and alcohol.
Despite the sudden shift to a stay-at-home lifestyle, consumption is remaining steady in most areas. Rather than going without, about half of consumers are drinking the same amount of alcohol as normal.
There’s even been a slight rise in alcohol consumption throughout the US. In New York, 22% say they have increased how much alcohol they drink. Both California and Florida show 21% are drinking more than usual, and in Illinois, 23% are now consuming more alcohol.
With so much disarray and uncertainty, consumers are seeking out alternative sources for their usual food and drink. Delivery from liquor stores and groceries, for instance, have seen an increased demand during this pandemic. Wine sales grew by 27.6%, spirits by 26.4%, and beer, cider, and malt beverages by 14%.
This opens up an opportunity for restaurants and bars, as well. If they can also accommodate this growing consumer taste for takeout food and drink, they are more likely to pull through these crazy economic times.
Navigating Through Liquor Laws
Alcohol has always been a cash cow for food establishments. While food profit margins are typically in the single digits, alcohol can bring in as high as a 20–40% profit.
That said, this poses an issue in the current climate, as not all state alcohol laws are the same throughout the US. Alcohol has been deemed as essential in most states (save for a short stint in Pennsylvania), and both manufacturers and retailers are allowed to continue operations even as the coronavirus spreads.
However, only 12 states currently allow the delivery of all alcoholic drinks. Thirty-one states allow the delivery of wine and beer, while seven states do not allow the delivery of any kind of alcohol whatsoever.
This is all subject to change, of course. Many things are still up in the air, as states are quickly assessing and adjusting liquor laws to help support their ailing local businesses.
Ordering Bottle Service
Alcohol and delivery are a perfect pairing. Not only do the sturdy bottles and cans hold up well in transport, alcohol also has a longer shelf life.
For restaurants, this means a bulk of beverages can be purchased and stored in inventory.
For consumers, it allows a bottle of their favorite wine or craft beer to be conveniently pre-ordered and picked up from a neighborhood bar. Even if they don’t plan to pop open a bottle that night, adding beverages to an online cart saves them an added trip to the supermarket. Either way, they’ll be ready for the many Netflix and chill nights that lie ahead.
At the moment, wine and beer are the top picks when it comes to alcohol takeout or delivery.
This makes sense, as both beverages are served by the bottle. But with the right price and packaging, as many as 45% of consumers say they would also consider ordering neat spirits, sparkling wines, champagnes, and cocktails.
When it comes to their drink of choice, people tend to stick with the familiar. Three in five people are consuming the same type of drink at home as they would normally order out in a restaurant or bar, and 59% of consumers are still drinking the same brands.
But we’re still early in the game. While brand loyalty is alive and well, studies show 31% are also inclined to order items exclusive to the specific establishment.
Say, a restaurant or bar is known for a signature drink. The average consumer is likely to place an order, and if it’s enjoyed, will return for something not found anywhere else and definitely not easy to make at home. They’ll even pay a premium for it.
A promising 61% of consumers already expect to pay more for alcohol ordered through takeout or delivery than alcohol purchased from a supermarket.
With the right mix of alcohol and creativity, a food establishment can effectively draw in more customers and increase sales. Special offers or bundles also provide added incentive.
Understanding the Business of Booze
As we can see, there’s still room for growth, as long as an establishment thinks outside the traditional takeout box.
The purpose of a restaurant or bar remains the same – to give patrons a wonderful dining and drinking experience. Only now, everything is done at home.
But if the COVID-19 pandemic has taught us anything, it’s that we Americans are an adaptable, yet thirsty, people. Although establishments have been forced to scale down or close, one area of business in particular has been doing surprisingly well – the business of booze.