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Alcohol as a Revenue Generator

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  • 0:04 Alcohol & Revenue
  • 0:30 Selection of Alcohol to Serve
  • 2:34 Pricing Alcohol
  • 3:49 Lesson Summary
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Lesson Transcript
Instructor: Ian Lord

Ian has an MBA and is a real estate investor, former health professions educator, and Air Force veteran.

In this lesson, we'll review how alcohol sales can function as a revenue generator in the restaurant business, along with considerations restaurants should use in choosing the selection and price.

Alcohol and Revenue

Steve's Sandwiches is a local sandwich restaurant founded on the idea that there are many places to get a corned beef or veggie sandwich, but sometimes it goes down better with a nice alcoholic drink. Steve realized that aside from the culinary appeal to differentiate his restaurant from his competitors, serving alcohol brings in an additional source of revenue. Let's take a look at how alcohol selection and pricing can help make the restaurant money.

Selection of Alcohol to Serve

One of Steve's major considerations is what kind of alcohol to sell. His alcohol license is limited to serving beer and wine, which means he doesn't have to pay attention to stocking and selling liquor. He must decide whether he will sell wine, beer, or both in his restaurant. This decision is largely influenced by space, customer preferences, and whether or not a certain drink pairs well with the menu.

Space is a major consideration since storing the drinks at a proper temperature along with storing and keeping different kinds of glassware can take up a lot of room. Is he going to stock five kinds of beer or 20? Is he going to serve draft beer, which is beer served from kegs or sell bottles? Is he going to buy the traditional glasses for each kind of beer or use regular pint glasses? How many different bottles of wine will he keep in stock? As with beer, enthusiasts will insist on appropriate glassware for higher quality drinks.

Customer preferences also play a role. Some establishments may do fine primarily serving cheap, mass produced beer from the larger, nationally known breweries. Others may include or exclusively offer a menu consisting of locally made craft beers, which are small-batch beers that are only sold locally or regionally, also called microbrews. If the region is known for winemaking, then the menu may tend to favor local varieties beyond those from the major production regions in California.

Finally, pairing is an important consideration. Pairing attempts to match drinks with menu items that go well together. It would be awkward to match a glass of chardonnay with a barbecued brisket sandwich, just as it would be odd to suggest a dark porter beer to go with a chicken salad. Offering a wide enough variety of beverages that compliments the food menu promotes customers ordering a drink to go with their meal. When customers drink alcohol they may also tend to buy more food either because they are enjoying themselves or to counteract the effects of the drink.

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