- More than 30 states allowed alcohol takeout and delivery during the pandemic.
- Off-premise alcohol sales were a lifeline for restaurants, and many want to keep it around.
- Experts say restaurants have to differentiate offerings from liquor stores.
- See more stories on Insider’s business page.
Takeout and delivery alcohol sales have been a lifeline for restaurants during the past year, and the industry is hoping they’ll be allowed to continue — but experts told Insider that competing with liquor stores while still turning a profit is easier said than done.
As the pandemic for restaurants to close dining rooms and limit capacity, more than 30 states allowed bars and restaurants to sell alcohol to go in an effort to stay afloat. Exact numbers for alcohol sales in the industry aren’t available, but restaurants typically aim to make 30% of revenue from alcohol sales.
The National Restaurant Association, which has more than 40,000 members including McDonald’s and Darden Restaurants, says that off-premise alcohol sales have helped restaurants stay in business.
“For restaurants, the road to recovery is going to be a long one,” Mike Whatley, vice president of state and local affairs, said. “Expanded off-premise alcohol regulations are one of several policies restaurant operators will need going forward.”
Many large chains embraced the new rules and capitalized on alcohol sales to make up for the pandemic slump. Applebees, known for promoting $1 cocktail deals pre-pandemic, sells nearly a dozen different to-go cocktails now at some locations. Though the company declined to share sales data with Insider, it will continue to sell to-go alcohol “as long as it’s something our guests want and is profitable for our franchisees,” Patrick Kirk, vice president of beverage innovation, told Insider.
While the majority of states allowed to-go alcohol under some circumstances over the past year, laws vary by locales, and Applebees franchisees were able to offer different drinks depending on their circumstances. Bulk beverage containers and cocktail kits were two of the most popular options at Applebees and other restaurants across the country.
Alcohol sales were up across the board last, and not just at restaurants. Overall sales, not including restaurant sales, were up nearly 25% in 2020, according to NPR. Delivery apps like Drizly and Saucey also benefitted from the loosened restrictions.
Even restaurants that didn’t previously sell alcohol are getting in on it. Buffet chain Golden Corral was hit especially hard by restaurant closures and is now working with Icee and Coca-Cola to sell frozen drinks like a Jack and Coke Icee to help attract younger customers.
Though alcohol sales helped restaurants survive over the past year, they might not be a tenable way forward.
They’re still a small piece of most restaurants’ businesses, analyst Mark Kalinowski told Insider. And there are some clear challenges: it tends to be cheaper for customers to just go to a liquor store, he said. “It’s a competitive business and highly fragmented even with restaurant closures.”
To stay competitive, restaurants will need to show that they’re valuable as one-stop shops for food and alcohol. They will have to focus on signature cocktail mixes or already mixed beverages to provide something that liquor stores don’t.
So far, Florida, Colorado, Texas, and Georgia all have laws in the works that would extend the pandemic-era rules.
“Laws that made sense pre-pandemic don’t necessarily make sense now,” Kalinowski said.
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