Liquid Assets: Strong Growth for Adult Beverage-Centered Restaurants

Adult beverages take center stage at a new generation of casual-dining chain restaurants built on the premise that the beer, wine or cocktails menu deserves as much attention as the food menu.

These concepts—Cooper’s Hawk Winery & Restaurant, Yard House and Eddie Merlot’s among them—also have banked on the belief that today’s increasingly beverage-savvy consumer will gravitate toward restaurants that respect the idea that sampling from an interesting selection of alcohol beverages is a key element of a memorable dining-out experience. It’s a gamble that seems to be paying off: Cooper’s Hawk, Bar Louie and Eddie Merlot’s all rank on Technomic’s list of the Fast 50 Growth Chains, culled from among the 2014 Technomic Top 500 Chain Restaurants (as ranked by 2013 U.S. systemwide sales). Craft beer-focused Yard House, which didn’t make the Fast 50 list, still saw impressive sales growth of 17.5%—to more than $370 million—in 2013.

The standout performances of these beverage-centric concepts is notable especially in light of the lackluster growth of casual-dining chains on the whole. As a group, varied-menu chains on the Top 500 list (including category leaders Applebee’s and Chili’s) recorded a 2.5% increase in U.S. systemwide sales last year. Limited-service (fast-food and fast-casual) chains, in comparison, saw growth of 3.8%.

Now consider Cooper’s Hawk: The Countryside, IL-based chain, which produces more than 125,000 gallons of wine each year and offers guests membership into an exclusive wine club for $18.99/month, saw sales spike 26.4% in 2013 to $91 million. Cocktails-focused Bar Louie? Sales up 23.5%. Fort Wayne, IN-based Eddie Merlot’s? Sales up 19.4%.

Notably, casual-dining concepts are consumers’ top restaurant destination for adult beverages. Fifty-three percent of consumers ages 21 and older polled through Technomic’s Consumer Brand Metrics program said they generally order an adult beverage at a casual-dining restaurant at least once a month, versus 40% who said the same about fine-dining restaurants and 45% who reported enjoying an adult beverage monthly at a local, independent full-service restaurant.

Let’s take a closer look at a few of these dining concepts where adult beverages are at the fore:

Concept: Cooper’s Hawk
Founded: 2005
Headquarters: Countryside, IL
2013 year-end stats: $91 million in sales/14 units; No. 284 on the Top 500
Positioning: Founder Tom McEnery sought to create a winery that offered a full-service restaurant component and opened the first Cooper’s Hawk in the Chicago suburb of Orland Park nine years ago; a central wine production facility is located in nearby Countryside and will produce nearly 50 wines in 2014. (Grapes come from California, Washington, Oregon and Michigan.) The Cooper’s Hawk Wine Club serves as an important differentiator for the chain; members pay $18.99 a month and can choose to receive red wines, white wines, sweet wines, or an alternating selection from the Cooper’s Hawk winery.
News and notes: Cooper’s Hawk announced plans in June for its first Washington, DC-area location, to open in 2015. A second Orlando location will open next month. Of note among Cooper’s Hawk’s food selections is the Life Balance menu, offering appetizers, entrées and a dessert containing no more than 600 calories each. Wines by the glass are priced at $6.50 to $12, and six wine flights (including a create-your-own option) are offered.

Concept: Eddie Merlot’s
Founded: 2001
Headquarters: Fort Wayne, IN
2013 year-end stats: $43 million in sales/9 units; No. 486 on the Top 500
Positioning: Eddie Merlot’s offers a classic steakhouse menu and emphasizes an approachable wine list. Like Cooper’s Hawk, Eddie Merlot’s aims for an affluent, somewhat older-skewing audience. More than 75 wines by the glass are available; Reserve wine lists offer more than 150 selections. On the menu, wines are listed progressively (sweet to dry, mild to full intensity) to help consumers find a selection they’ll enjoy.
News and notes: As of May, Eddie Merlot’s was developing its 11th unit, in Englewood, CO. The chain made its Pennsylvania debut in Pittsburgh in March; other locations are in Illinois, Indiana, Michigan, Ohio and Kentucky. This summer, Eddie Merlot’s is offering a limited-time Napa Valley Summer Grill special, featuring dinner for two (choice of four entrées, Napa or Caesar salad and fresh vegetables) plus a bottle of wine from Trinchero Family Estates for $89.95.

Concept: Yard House
Founded: 1996
Headquarters: Irvine, CA
2013 year-end stats: $370.1 million in sales/48 units; No. 95 on the Top 500
Positioning: Operated since 2012 by Darden Restaurants (which purchased it from TSG Consumer Partners for $585 million), Yard House describes itself on its website as “a modern public house where food and beer lovers unite.” The chain also claims to offer the world’s largest selection of draft beers—100+ taps at each location. Selections change regularly and are tailored to local tastes.
News and notes: New additions to Yard House’s craft-beer rotation this spring included Founders All Day IPA, Green Flash Le Freak, Ace Pineapple Cider and Omission gluten-free beers. Also in May, Yard House opened its first Oregon unit in beer-loving Portland.

In the highly competitive, take-share environment in which full-service restaurants are operating, a differentiated concept positioning is essential for sustained growth. Dining out with family and friends remains an acceptable indulgence for many Americans, but consumers now more than ever seek a dining-out experience (encompassing food, beverage, atmosphere and service) that justifies the outlay of their not-unlimited disposable income. An expansive, high-quality and, perhaps of most importance, dynamic selection of adult beverages absolutely can be a route for restaurants to achieve this.

 

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Christine LaFave Grace

Christine LaFave Grace writes for and produces Technomic's Trends & Directions e-newsletters. She joined Technomic in 2013 as an associate editor. Her previous roles include assistant digital editor for Crain Communications’ Modern Healthcare magazine and associate editor at Reed Business Information’s Restaurants & Institutions magazine.

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