National Restaurant Association: Alcohol to-go is here to stay

The alcohol to-go business became a critical lifeline for an untold number of restaurants during the pandemic. So critical, in fact, big money was thrown at the business in 2020 and 2021. Uber, for instance, bought Drizly for $1.1 billion in 2021, while Square added a to-go alcohol delivery feature and DoorDash expanded its alcohol delivery to dozens of states that same year.

Now, with pandemic-related restrictions distant in the rearview mirror, off-premises alcohol very much remains a boon for many concepts. Indeed, 20 states and Washington, DC, have since made emergency pandemic regulations allowing alcohol to-go permanent. Another 14 allow it on a long-term, but temporary basis (New York, for example, legalized to-go cocktails through 2025). According to a new report from the National Restaurant Association titled “On the Menu: Trends in on- and off-premises beverage alcohol,” this to-go shift is the most significant change to state alcohol laws since the end of the Prohibition in 1933.

And, as the association notes, it’s here to stay, driven by continued consumer demand for such options. Below are some key takeaways from the report.

Takeout > delivery

Unsurprisingly, digital alcohol sales jumped in 2020, with 44% of consumers buying alcohol online that year, compared to 19% in 2019, according to the Industry Wine and Spirits Record. This increase corresponds with the increase in restaurant operators that began offering the option of off-premises alcohol during the pandemic, including 71% of casual dining operators and 63% of fine dining operators.

Those digital alcohol sales are expected to continue growing at a compound annual rate of 17% through 2026. And despite the growth (and capital investments) in alcohol delivery specifically throughout the past two years, takeout remains the to-go option for these sales. About 90% of operators offer off-premises alcohol with takeout orders, while just 26% of casual dining and 13% of fine dining offer third-party alcohol delivery, and just 10% of offer in-house alcohol delivery, according to the association’s report.  

Younger consumers are driving the alcohol to-go stickiness. Over 40% of both Gen Z and millennial consumers included an alcohol beverage with their takeout or delivery order in the last six months, for instance. Much opportunity remains as well, as only 24% of all adults 21 and over ordered an alcohol beverage with their off-premises order.

Where are those opportunities? For starters, most adults (61%) say they would like to have more alcoholic beverage options to include with off-premises orders. Further, there may be an awareness gap and, therefore, a marketing opportunity. According to the association, 43% of adults say the availability of alcohol would make them more likely to choose one restaurant over another for a takeout order, yet most consumers aren’t opting for alcohol to-go, suggesting consumers may not know the option even exists.

Alcohol options attract a dine-in veto vote

Of course, alcohol is a magnet for dine-in consumers as well. Over 40% of adults ages 21 and older choose a restaurant over another restaurant based on the availability of alcoholic beverages on the menu. That number jumps among beer drinkers (70%), wine drinkers (69%) and cocktail drinkers (67%). Demographically, millennials are the most likely consumer group (57%) to choose a restaurant based on the availability of alcohol beverages. And though Gen Z consumers drink less than other generational cohorts, 45% choose a restaurant based on its drink menu.

Interestingly, and despite these statistics, consumers are just as likely to drink wine with a meal at home as they are in a restaurant; 31% of adults 21 and up say they drink wine with a meal at a restaurant, while 32% say they drink wine at home. That gap starts to widen a bit with beer – 30% of adults say they will drink a beer with a meal at a restaurant, versus 28% who say they’ll do the same at home.

Cocktails are perhaps the biggest opportunity for restaurants to attract more diners; 34% of adults say they will drink a cocktail with a meal at a restaurant, compared to just 21% who will do so at home. Millennials are the most likely to order a cocktail at a restaurant (44%), followed by Gen Xers (35%) and Gen Z (31%).

Promotional opportunities

With the data to suggest that alcohol options – both on- and off-premises – could drive traffic across demographics, how do restaurants ensure those options are top-of-mind? For wine, beer and cocktail drinkers alike, most consumers are seeking local sourced options, tasting events and food pairings to start.

Eighty-three percent of wine drinkers, for instance, say they would like an option of ordering wine from a local producer, while 81% say they are interested in attending an event featuring food and wine pairings. Seventy-eight percent would like to order wine selected by the restaurant to pair with food items on the menu and, indeed, most consumers (82%) trust restaurant staff to make such recommendations. Of course, in this environment, most wine drinkers are also seeking value, and 80% say they would take advantage of a wine discount when the restaurant isn’t busy.

Beer drinkers are also seeking value, and 78% say they would like discounted options when the restaurant is less busy. Most – 81% - also want an option to order beer from a local brewery and over 75% would participate in tasting events that offer beer selections or would participate in an event with beer/food pairings.

Cocktail drinkers are most likely to seek out a value, with 83% saying they would take advantage of a mixed drink discount during less busy times. Eighty percent would like to order drinks made with locally-produced distilled spirits, and 76% would attend an event with food/cocktail pairings.

A growth catalyst

In addition to meeting clear demand, high-margin alcohol sales can provide quite a lift for restaurants — with gross profit margins averaging about 75% for beer and 60% to 70% for wine. That’s compared to the general profit margin of a restaurant that only sells food, which is about 3% to 6% on average. Additionally, restaurants that offer alcohol tend to generate over 20% of their revenue from those sales, so including alcohol as an off-premises option, particularly as off-premises business remains steady, can provide quite a boost to the bottom line.

Given this post-pandemic demand, finding the right alcohol program, and promoting it effectively, can provide a major growth catalyst, according to Michelle Korsmo, president and CEO of the National Restaurant Association.

“Consumers are taking note and if we can continue to stay in front of their preferences, there is no limit to how far beverage trends can move the needle for the restaurant industry,” she said in a statement.

Contact Alicia Kelso at [email protected]