"Hasn't alcohol in restaurants already been a thing for quite some time?" you may be wondering. And you'd be right. Being able to grab a beer with your gourmet burger or enjoy a glass of wine with your steak or seafood dinner out is certainly not a new concept.
What is new is that in the wake of the coronavirus pandemic, some restaurants that have never served alcohol in the past are giving it a whirl -- and they've got high hopes. Here's a look at a couple of restaurants rolling out this addition to their menus and the impact commercial investors might expect.
Could alcohol be the answer?
Between pandemic-related lockdowns and restrictions, public fear of dining out during virus spikes, and labor issues, restaurants have had it rough for quite a while now. Takeout and delivery apps have been an important part of keeping many going during the hardest times, but now they're looking for strategies to bring customers back to eat at their restaurants, be it inside or in an outdoor dining area.
Many people have spent little time in restaurants during the pandemic, and if they're going to go back now, they may want to make an experience out of it. For many, that means being able to enjoy not only a nice meal but also a drink out with friends or family.
IHOP, part of Dine Brands Global (NYSE: DIN), is offering its franchisees the opportunity to add a company-designed alcohol menu, including beer, wine, and champagne, to their offerings. According to CNN Business, the company only expects to roll this menu out to about a dozen of its restaurants by year-end, but IHOP president Jay Johns is hopeful that eventually well over half of the company's 1,750 restaurants will serve alcohol.
IHOP isn't in uncharted territory here. Taco Bell, part of Yum! Brands (NYSE: YUM), actually began rolling out its Taco Bell Cantina restaurants back in 2015. These more upscale locations offer an expanded menu including beer, wine, sangria, and a Baja Freeze with your choice of liquor. While Taco Bell only has 35 such stores now, the chain is currently testing a plan to convert existing Taco Bells into Cantinas.
The downside of adding alcohol to the menu for any restaurant is the upfront investment restaurant owners need to make, including acquiring an alcoholic beverage license and familiarizing staff with the regulations and offerings. But in the current climate, the potential benefits are getting harder to ignore.
The Millionacres bottom line
Adding alcohol to the menu could not only bring customers back to a physical restaurant but will often lead to bigger totals and tips per table, too. This can help restaurants more quickly recoup some of that lost revenue and make servers happier with their bring-home pay, which can help alleviate some staffing issues. Bringing more customers back out to dine at restaurants rather than at home means more foot traffic for surrounding businesses as well -- and that's something many real estate investors can raise a glass to.