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Liquid Courage - How To-Go Alcohol Sales Might Help You Stay Afloat

Full-service operators have long understood the importance of alcohol sales. With bar business curtailed by social distancing requirements, even restaurants open for limited-capacity business are unable to recoup much of those lost profits. Take-out booze could help keep the lights on until the market improves, and states and municipalities have been loosening regulations around liquor sales throughout the pandemic.

This article takes a look at how other operators solve logistical problems, from pricing to packaging and promotion, and explore ways to recreate signature experiences with to-go liquor, and learn why one operator decided the extra income just wasn't worth the risks.

That is some cause for celebration.

That said, alcohol is heavily regulated, and state laws vary and the legal landscape is subject to change. This article reviews how operators can sell more drinks with curbside takeout; however, the discussion needs to be tempered with strong caveats. If you are not well-versed in the laws of the jurisdiction governing your business, you need to get educated on a variety of issues, including packaging and liability.

Cocktail Kits

Marc Borel is the beverage director at Rainbow Lodge, a 44-year-old wild game and seafood restaurant situated in 110-year-old log cabin in Houston. Rainbow Lodge tends to be a special events restaurant, says Borel. In the past, there was typically, "a [marriage] proposal every day."

As you would well-imagine the pandemic changed business usual.

While Texas relaxed its laws to allow for individual sales to-go, as well as bottles and cans of wine and beer, operators can't sell wine or draft beer by the glass. That's shaped how Borel conceptualized the drinks to-go program. In addition to individual mixed drinks and bottles of wine or beer, Rainbow Lodge offers cocktail kits, which are designed to serve six servings - "half-bottles of liquor to create drinks like Martinis, Manhattans, Bloody Marys, Palomas and the like."

Texas also requires that patrons purchase food with to-go drinks, something that's mandated by other states, including New York. Rainbow Lodge's menu is varied enough that diners of all palates and budgets can find something to eat with their drinks; Borel says the chicken fried quail bites appetizer is a popular pick.

For the cocktail kits, Borel really wanted to give people the experience of haing one of their signature drinks, like the hibiscus margarita, in their home. The kits provide a half bottle of liquor with all the garnishes needed to serve the drink as it would be presented on-premises. For the Old Fashioned, for example, the kit includes "vermouth, cherries, [and an] orange peel all together, so you measure what you need, throw in the bourbon and it's great," says Borel.

Customers were more willing TO PAY A HIGHER PRICE POINT when the product presentation matched their expectations.

Texas law requires to-go cocktails to be packaged in a sealed container, then put in a plastic bag that's sealed with a zip tie. This packaging helps decrease the risk of drinking and driving by making alcohol more difficult to access.

Rainbow Lodge uses lidded cups for the to-go drinks. Noticing that customers were ordering several different cocktails in a single takeout order, staff at the Rainbow Lodge started labeling each drink with a graphic label that features the drink's name, which is applied over the straw holder to prevent diners from drinking from the cup.

Drinks are then packaged in cellophane bags that have a slight shimmer and sealed with "nice zip ties, so the presentation is really nice." These extra steps helped Borel feel like the restaurant was doing everything possible to make the takeout experience mimic the care and attention of dining in. "We want to make sure when you bring the Lodge home to you, it's pretty," he explains. While the to-go cups were purchased by the chef from their existing suppliers, Borel says he shopped for the stickers, cellophane bags, and zip ties on Amazon. He created the graphic stickers himself and prints them onsite.

Rainbow Lodge is now open for dine-in. While Texas allows for 75 percent capacity, Rainbow Lodge is capping capacity at 50 percent, and they've removed dining tables to reinforce social distance. While some customers are happy Rainbow Lodge has reopened, others still prefer to keep their distance. For this reason, Borel says they'll keep offering curbside takeout, including the cocktail kits and to-go cocktails. As more people return to on-premises dining, he estimates his concept will scale back on the takeout options.

Booze To-Go

Houston restaurant Eighteen36 sells craft cocktails, local beer, and Greek-American food. It opened two months before the stay-at-home orders, says Jason Scheinthal, the restaurant's owner and managing partner. Scheinthal credits his public relations firm for strong outreach to the local community, and says the new restaurant enjoyed "significant growth, better than our projections, all the way until right before Houston closed on-premises dining." Scheinthal first noticed a dip in sales on March 11, when the city canceled the Houston Livestock Show and Rodeo, which is a local "institution," he says. At the height of the pandemic, Eighteen36 sales were only $10,000 a month, versus $60,000 pre-pandemic.

The concept quickly pivoted to takeout and delivery and leaned into craft cocktails, for which they had gained a reputation among guests pre-COVID. The restaurant first tried a parking lot bar, offering boozy snow cones to pedestrian traffic. They halted the parking lot bar as foot traffic declined, and then shifted to selling pre-mixed drinks, cocktail kits, and bottles of liquor and wine to go.

While they originally sold their mixed drinks in Styrofoam cups, the packaging wasn't attractive and didn't meet customer expectations. Alcohol isn't cheap, and operators need to charge a fair market price to make up for the cost of ingredients and alcohol taxes, says Scheinthal. So the team decided to invest in nicer packaging to make for a better guest experience. Customers were more willing to pay a higher price point when the product presentation matched their expectations. "We didn't get push-back [like] when we handed [someone] a Styrofoam cup and a 375 and said 'here you go.'"

Now, the premixed cocktails for two are sold in medicine bottles. Repackaging the drinks helped the restaurant hit their target price point, while the artisanal design resonated with their target audience -- craft cocktail enthusiasts who missed specialty drinks.

"We would rather spend the $1 on packaging and charge more aggressively for the overall product," Scheinthal says, noting that other operators may feel differently. "If you'd rather spend less on packaging, you can't charge a premium price and you have to be aware of that."

With to-go drinks, Scheinthal admits he was concerned about the potential for drinking and driving and over-serving patrons. "We never really saw that, [but we were] very careful in terms of what we did to prevent it." As at Rainbow Lodge, the staff follows state laws regarding bagging of cocktails. They focus on making it difficult to get into the drinks, "so until you get home it isn't practical" to consume them. With the medicine bottles, that means melting a plastic seal over the bottle so people can't just unscrew the cap.

Scheinthal recommends operators spend time thinking about how to-go liquor will work best for them: is volume better for their concept, in which case it doesn't make sense to invest in nicer packaging, or are larger price points desirable, in which case differentiating factors like the graphic packaging can make a difference? What type of drinks should they sell, what does the right packaging look like, and how can an operator make the offering unique to their concept?

These initial ideas can lead to internet research. Once operators have some inspiration or perhaps an idea of how to package items based on internet or social media research, Scheinthal suggests they approach existing vendors. It's "very likely they'll be able to help you find something similar or close" to what you like, he notes. Leveraging existing relationships saves time; beyond the initial research, operators can leave it up to their sales reps to get what's needed.

To get the word out about their to-go drinks, Scheinthal promotes via social media and the old-fashioned way: by sending mailers and posting flyers on bulletin boards, and in local apartments and condominiums. Eighteen36 also promotes liquor orders with a food discount, using an in- expensive menu item -- hummus and pita -- as a hook for anyone buying liquor. While Eighteen36 is currently open at 50 percent capacity, they're continuing the to-go program as well. "On very few days do we get to 50 percent," says Scheinthal. "What you're allowed to do and what people feel safe doing are not the same thing."

Special Touches

Operators who have a solid understanding of regulations, logistics and packaging can sell liquor; but those who find ways to make their offerings special will re-ally see a boost in sales. When thinking of ways to make their to-go drinks special, these operators thought about their concept.

They need to consider what were they already doing well and what attracted guests pre-COVID, and then figure out ways to create new offerings to leverage past customer loyalty and connection. Additionally, guest engagement has never been more critical. How could they make a patron dining at home feel like a part of the restaurant community?

Scheinthal suggests operators think of ways to highlight the guest experience with a specialty drink or a cocktail kit. "Just sending a cup with a Jack and Coke is fun, but if you can send the bottle, a shaker, and recipes, people are looking for something interactive and fun." For Eighteen36, attention to detail and special packaging has led customers to think of them for special occasions: people are buying cocktail kits for gifts and special events.

I don't want to turn MY PATIO AND PARKING LOT into a viral video that will ruin business forever.

Rainbow Lodge holds a popular monthly wine tasting event, which can draw as many as 200 patrons, Borel estimates. When restaurants closed, he wanted a way to replicate their signature event for customers at home. The solution was an At Home Wine Tasting Kit: four 375 mL bottles of wine, wine tasting notes, and paired tasting portions. Packaging couldn't be easier: the food is packaged in their to-go containers, wine tasting notes are printed off, and the entire kit is put in one paper bag.

The At Home Wine Tasting Kit is offered weekly, with rotating themes, such as "wine and cheese," featuring wines from four countries with cheese dishes to complement the wine. They've also done Spanish tapas, where diners got "two big bottles of Spanish wines and you used the rest of the bottle to make a sangria." To celebrate National Pinot Noir Day (August 18), they offered a pinot-themed tasting of a sparkling pinot, a light pinot from New Zealand, a Southern California pinot, and a French pinot.

Given that few wines are sold by the half bottle, choices are limited. Borel doesn't like to repeat, but says these market constraints have forced him to be more creative.

Sales for each Home Wine Tasting Kit is are capped at 72 units, and they sell out. The special is posted on the website Thursday nights. Friday mornings, it's emailed to their 60,000-person email list. Within ninety minutes of the email blast, all 72 kits are sold out. Borel doesn't post the special on social media or promote it to the press: "I don't want to disappoint people because they can't get it," he says.

Neither does the beverage director want to sell more kits, even though demand might support it. Logistically, 72 kits break down into an even number of wine cases. Limiting capacity creates demand; consumers who miss out on the deal are likely to come back next week. Seventy-two is also a number that won't tax the kitchen, which is important given that the restaurant is now open for dinner service when patrons are stopping in for their kits.

Pricing for the in-house wine tasting is $38 per person. The kit is priced at $89 and serves two; the price point allows them to offer value to customers while hewing close to the cost of the in-person events. Borel says he's had to tweak the language to set customer expectations. People mistakenly bought one kit per person (when it's meant to serve two), while others thought they were receiving a full meal, when the food pairings are intended to be small bites.

Slight misunderstandings aside, the reception has been positive. "Some people get it every week. People will do Zoom tastings with family or the whole neighborhood cul-de-sac will do it," Borel says. The wine tasting kit experience has also led to requests for private tastings, like a virtual martini tasting held via Zoom. "A group will get a martini kit and they'll make four martinis from the ingredients we provide, and I'll join them on Zoom and tell them the story behind the Vesper with James Bond," Borel explains.

In these creative ways, Borel is continuing to give customers what they want and need, while offering the same style of service, food and drink that makes Rainbow Lodge a top pick for life's special events.

Business is coming back now. While Rainbow Lodge isn't at pre-pandemic levels, the dining room is turning over two or three times in a night. Still, Borel credits to-go cocktails with boosting income during uncertain times, and says they've been able to "keep our staff in place and allow the type of experience in house that you expect" because of to-go alcohol sales.

A Long Shelf Life

Unlike food, alcohol doesn't go bad. That gives operators time to experiment with the program and identify the special touches that work for their audience, advertise their to-go drink program and, most importantly, "give it time to work," says Scheinthal. "Guests are bored, and they're looking for stuff to do at home." When a favorite restaurant gets creative about the customer experience, as these operators have done, it really stands out to someone ordering take-out to support a local business. What's more, that creativity makes service fun for staff members who may be missing the way things used to be.

While selling alcohol with to-go orders has given many restaurants a valuable income boost, it's not a panacea. The industry is hurting, and until there's a vaccine, business may continue to be depressed, even when operators are trying to 'do everything right.' As with so many elements of successful restaurant operation, whether to-go liquor sales make sense depends on the concept, location, and customer base.

Peter Klamka is a partner at The Blind Pig, a Las Vegas sports bar, among other concepts in Los Angeles and Michigan. The Blind Pig is heavily tourism-dependent in a town where tourism and conventions drive the economy. As a sports bar located near the new Raiders stadium, The Blind Pig is a popular hangout for local athletes and fans of both UFC (Ultimate Fighting Championship) mixed martial arts and the Raiders. Pre-COVID, the bar was open 24 hours, did strong pre- and post-club sales and was "a thriving mid-6-figure a month" business, says Klamka.

With sports and business both on hold, The Blind Pig is doing approximately 20 percent of its pre-pandemic business. Says Klamka, "Las Vegas is at the precipice of a depression [with] seven casinos closed, no Amazon convention, no CES, no 60,000 people on the weekends for the Raiders. To-go alcohol is not going to fix these problems."

The Blind Pig began offering to-go alcohol sales when Las Vegas first shut down, but discontinued selling alcohol with takeout because it didn't turn out to be a big driver of sales. "With 25 percent unemployment, there's nobody affording $12 cocktails," says Klamka.

As you would imagine, given the devastation to the local economy, diners are price sensitive. They were changing their alcohol consumption habits to reflect their uncertain incomes: while locals might order takeout, they would economize on drinks, picking up something cheap from the liquor store. Specialty drinks just weren't going to work in this market, Klamka realized quickly. He cautions operators, "it's okay but [to-go cocktails have] to be [done on a] case-by-case basis, and you can't enter into it thinking 'it's going to fix all my problems.'"

Photos of rowdy patrons on New York's Upper West Side made Klamka nervous about the sports bar's parking lot becoming "an outdoor bar or party" with patrons consuming to-go purchases onsite. "I don't want to turn my patio and parking lot into a viral video that will ruin business forever," he says. While nothing like that happened during the time when The Blind Pig was doing to-go alcohol sales, Klamka just wasn't comfortable taking the risk.

Changing regulations also affected his decision to discontinue to-go alcohol sales at the Las Vegas sports bar. Clark County (where Las Vegas is located), changed its regulations to allow for to-go alcohol sales; however, it required an additional license, which was yet another ex- pense for operators.

The license was set to expire with the different phases of reopening, but the phased approach was canceled, which created confusion. The lack of sales tax revenue led to an "extreme emphasis" on "fines and regulatory compliance," and the lack of clarity made the risk of penalty not worth the sales boost. "Do I really want to take the risk of a sizable fine to sell $200 of liquor on a Saturday?" asks Klamka.

The answer was a clear "no". While The Blind Pig is open for dine-in, take-out, and delivery, they've taken alcohol off the menu for to-go orders. In his other markets, however, Klamka's restaurants do offer to-go liquor sales, and he says it's working well. As Klamka astutely notes, the restaurant industry is hurting, and to-go alcohol sales alone won't solve operators' most pressing problems. Yet in many markets, to-go drink sales can boost profits until diners feel safe enough to come back at the volume needed to turn profits--and perhaps even beyond that.

As much as alcohol can boost revenue, don't lose sight of its liability to you and your guests. Local law enforcement is stepping up efforts to arrest those driving under the influence and they are maintaining databases of locations that might be overserving patrons. Violations can affect your concept's ability to renew its liquor license.