Restaurant bar programs get weird, wonderful and profitable
Three very on-brand speciality drinks from some very different brands. From left, the cheeky Bong Water from Cheba Hut, the St. Patrick’s Day-themed Rainbow Punch from Applebee’s and the Ring-a-Rita from Buffalo Wings and Rings.
A restaurant’s bar can be a big moneymaker as high-margin beer and cocktails drive ticket averages up and can be executed without adding a lot of labor hours. But doing it right brings three central matters into play: complexity for the franchisee, innovation and options that consumers want, and, of course, making money.
Cheba Hut, a marijuana culture-themed sandwich franchise based in Fort Collins, Colorado, has always had a bar at the center of the operation driving about 20 percent of the $1.4 million average unit volume. That’s at the high end of the fast-casual space the brand inhabits, but the management team wanted to enhance and standardize the program across the system.
“A consistent bar program is an imperative. We wouldn’t let any location go willy-nilly with the menu, so we shouldn’t do that with a bar,” said Chief Relationship Officer Seth Larsen. “That was the launching point for the new bar program.”
There’s been a bar in every Cheba Hut since 2006, and full liquor starting in 2009. That’s helped average tickets rise to $12.60, above many lunch-focused sandwich players.
But it rolled out a revamped program in 2018 to both enhance the operation and also help restaurateurs become a little savvier to bring the brand “where we should be operating as a 25-unit company,” said Larsen.
A set of standards helped professionalize the program and also helped operators save money on purchasing. “The implementation of the smart purchasing guide was crucial.
Liquor reps are very charming, they can talk you into a lot if you’re not a seasoned bar manager. So a lot of our locations would end up with a lot of SKUs, which is bad for consistency and profitability,” said Larsen. “There’s nothing worse than having a case of flavored vodka that is around three years later.”
A Cheba Hut bartender shaking things up behind the revamped bar.
Now, operators can deflect that charm by saying, “Sorry, we can’t deviate from our guide.”
The new program also helped align the brand with what customers actually drink. Larsen said Cheba Hut partnered with the likes of New Belgium, Odell and Lagunitas, all hip, West Coast beer visionaries. The hipster favorite PBR is in the mix, too. As for cocktails, a favorite is the Miss Parker, a reference to the pot-culture 1990s classic “Friday,” and locations have rotating “bong water” shots for $2—yum.
That brand alignment was also important for Buffalo Wings and Rings, which recently updated its bar program for the 70 locations across the system. Diane Matheson, vice president of marketing and brand strategy, said there was one big goal for the revamp.
“This is really about check average. It’s about getting folks to think about a cocktail with their meal,” said Matheson, adding that a simple table tent has made a big difference. “Before we had the drinks in the main menu, but what we found is that once the person ordered, we’d take the menu away.”
The table tent and some fun new drinks drove an additional 2 percent in dessert sales and 3 to 4 percent in beverage sales. Like Cheba Hut, the new drinks had to be unique to the brand to really stand out.
With the help of a beverage consultant, the brand balanced adding innovative, proprietary drinks without more complexity or additional ingredients because, while she and the management team wanted to drive check averages, the company‘s 20-25 percent beverage portion is still mostly beer to complement wings, so it couldn’t add cocktail expertise to the staff.
Michael “Bumby” Bombard, the founder of Straight Up solutions, said that rings true for a lot of restaurant brands. A company might have great bartenders, but the mix of trend spotting, purchasing, beverage innovation and knowing how to keep things simple is a unique set of skills. He said brands just need goals, and he does the rest.
“When we start looking at how to do things, one of the things we discuss are goals, but we have to have understanding of limitations, then understanding of what the consumer is wanting,” said Bombard.
Having something unique but as simple as a mix, some alcohol and a topping was a big focus for the signature drinks he created for Buffalo Wings and Rings.
“Signature drinks are just things that you’re not going to get anywhere else,” said Bombard. “Our margarita, we just made it a great margarita and put an onion ring on it. So it’s things that fit the brand that people would understand.”
It sounds a little silly, but customers want silly. That margarita has become a big seller, as has the Rock Daiquiri, a blend of rum, fruit juice and schnapps topped with Pop Rocks. It’s fun, it’s “Instagram worthy” and it’s unique to the brand.
Applebee’s tweaks bar at massive scale
Of course, everything changes when you have more than 1,700 locations. Applebee’s made some big changes to its bar program starting in 2017, including extremely cheap drinks in the $1 or $2 range.
It’s proven a success for operators, but after some changes that fell flat in the past, altering the core bar had everyone a little worried—even Patrick Kirk, the vice president of bar and beverage at Applebee’s. “I think operators were all pretty skeptical, you’re talking a $1 drink. That’s definitely changing what you think the bar should do. It’s supposed to be a profit center with the best margins in the restaurant and we essentially flipped that idea upside down,” said Kirk.
That flipped franchisee ideas about the program upside down, too. Now, Kirk said they’re “extremely excited each month” when the next limited-time beverage offer rolls out.
Kirk said the program fit in with Applebee’s budget-minded customers. There was no reason to bring in an aged balsamic shrub and single-source honey-infused Chartreuse liqueur for $19 when customers just want a tasty beverage for $2.
“What we’ve done is essentially eliminated a barrier to not order a cocktail, and that is price. If you’re a budget-conscious guest, a $1 cocktail helps there,” said Kirk. “But what we’ve found is that if you order a $1 drink and upsell on the next, net-net is still a lower cost than if you had two drinks. That math is not lost on us.”
Guest feedback says the company is onto something, as do same-store sales, which showed 5 percent growth in 2018. Kirk said guests are now helping dictate what monthly cocktails are rolled out beyond strictly seasonal flavors. Making something experiential is key, too, and signature drinks have been a big hit—the more novel the better to create “new news” and something fresh to market every month.
“That’s the biggest change I’ve seen in the last five years. The beverage program was always predicated on making the best tasting cocktail at value. That’s the same, but now the drink has to be part of a memorable experience as well that they can take a picture of it with their friends,” said Kirk. “That’s a new lens we look through.”
The new program has brought traffic, additional sales and Kirk said after a couple $1 drinks, customers tend to get some more snacks and other add-ons, too.
Getting drink ingredients to every location is quite a feat, though, and requires some seriously strong partnerships along the supply chain.
“It is a challenge, the logistics of pulling these off so quickly in all 50 states and many international locations, it’s not for the faint of heart. But the more we’ve done it the better we’ve gotten at it,” said Kirk.
He said it’s been interesting to see preferences develop across the country, with different flavors thriving on the East Coast compared to the Midwest and adding to the complexity of getting products to the right part of the country. But with results like Kirk reports, it’s an enviable problem.