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3 ways to boost beverage profit margins

specialty beverage trends restaurant

Most people have nothing against good old water. But if foodservice customers are opting for tap water because they don’t see any interesting beverage alternatives on your menu, that's like, well, throwing money down the drain.

Beverages, in fact, are a huge opportunity for operators, both in terms of profitability and revenue. With beverages, “there doesn’t seem to be a price resistance,” says Robert Goldin, executive vice president at Chicago researcher Technomic. “Consumers appear willing to pay for quality.”

So what can a savvy operator do to satisfy the thirst for unique, high-margin beverages? Plenty.

Emphasize natural, fresh ingredients

According to Goldin, the first step is for operators to figure out which beverages complement and fit their operation's menu and competitive positioning. "You're certainly not going to put a cold-pressed juice in a low-end restaurant," he says.

And with the rising popularity of specialty beverages such as coconut water, matcha and green smoothies, operators can find inspiration all over the place.  Areas where Goldin has seen recent growth include craft sodas, flavored waters, fruit- and vegetable-based refreshers, and anything deemed “natural.”

In fact, “free-from” beverages with natural ingredients, such as fresh-brewed iced tea, should be a particular area of focus for operators, as consumers continue to see all-natural, high-quality ingredients. "Fresh-brewed iced teas are where it's at, and it’s where you're seeing flavor proliferation," says Goldin. "’Fresh-brewed’ has a better quality connotation."

Innovate with flavor

Operators all over the map are adding unique flavor twists to their beverage menus. At the new Chicago restaurant and lounge GreenRiver, from Danny Meyer's Union Square Hospitality Group and the celebrated New York City lounge The Dead Rabbit, house-crafted bottled soft drinks do double-duty: The signature drinks are offered on their own and as cocktail mixers. Among the standouts is Pastor's Punch, a Japanese plum vinegar concoction that incorporates kombucha flavors.

A craft-cocktail approach to non-alcoholic beverages is also a signature at Los Angeles’ Gjusta, the bakery-cafe concept and sister operation to super-popular Gjelina. Customers can choose scratch-made nut milks, kale smoothies or rotating limeades in addition to seasonal beverages that use leftover produce from the kitchen.

Promote, promote, promote

Once you've figured out which beverages best suit your operation, deciding on presentation is key, Goldin says. "If you're asking consumers to spend $4 on a beverage, adding a few extra pennies to the product to make it more eye-appealing is well worth it," he explains. That includes everything from using unique glassware to developing creative garnishes. By doing so, operators can more easily generate excitement and convert more tap-water orders into beverage sales.

After nailing the options and how they’re served, operators need to communicate the choices to customers front-of-house. "The biggest mistake operators make is poor—or no—merchandising and expecting the beverages to just sell themselves," says Goldin.

While merchandising varies from operation to operation, there are some basic rules to follow, he says. Creating a separate section on the menu should be a given. In addition, server training is important (sales incentive programs can be extremely effective here).

Additionally, branding the items when appropriate, instead of using generic labels, is something else to consider. "I don't think there's any real magic to it," says Goldin. "But you do have to create an aura of specialness around it."

Still not sure that creating a beverage program is worth the trouble? Think again, Goldin advises. "Special beverages have an opportunity to elevate the image of an establishment," he says. "They don't bring in customers per se, but they certainly allow operators to upsell at a higher margin."

Find inspiring ideas to help boost beverage profit margins.

This post is sponsored by Lipton®

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