Boosting Profits One Sip at a Time: The Power of Specialty Beverages

What do today’s restaurant operators need to manage the challenging sales environment? A break. Specifically, a coffee break. More specifically, a specialty beverage break. 

That is, according to Revenue Management Solutions (RMS) recent survey, Tapping into Specialty Beverages to Maximize Restaurant Sales, which suggests that the coffee (or boba or smoothie or soda) break is a growing trend— and one that could significantly boost your restaurant’s revenue. 

Rethinking Beverages

The typical drink upsell—soft drinks and coffee or tea—has decreased over the past few years as customers increasingly eat restaurant food at home. 

In its place, we’ve seen an explosion of specialty beverages that serve as enticing add–ons or stand-alone orders. These drinks offer a profit-making opportunity at a time of declining sales and foot traffic. 

The data paints a juicy picture:

• 80 percent of respondents in our Q1 2024 survey of 600+ people reported ordering specialty drinks multiple times a week despite reporting a decline in their overall restaurant visits. 
• Though nearly half of survey respondents say they purposely order less to save money, they still value their drink orders. One in four respondents order specialty beverages more than once a week. 
• While three in four survey respondents believe restaurant prices are higher, other factors, such as flavor, outweigh price when ordering specialty beverages, particularly in the full-service segment. During a time of increased price sensitivity, beverages create an opportunity to increase the total check. 
• Delivery users are less price-sensitive than customers using other sales channels. This presents a golden opportunity to upsell specialty drinks before checkout on your restaurant app. 

What’s on the Menu? 

For restaurants looking to capitalize on the specialty beverage craze, consider these customer preferences: 

• Coffee Reigns Supreme: Hot or iced coffee remains the king of beverages, with 82 percent of respondents favoring a caffeinated treat.
• Shifting Preferences: Soft drinks hold the number two spot overall, except for Gen Z, who ranked fountain drinks as their top choice and house-made beverages as number two.  
• Millennials and Mocktails: House-made cocktails can be a draw, but most respondents prefer non-alcoholic options. For restaurants with liquor licenses, catering to millennials is key. They ranked alcoholic beverages higher than the average respondent. However, specialty drinks, including those with health benefits, hold a top-three position across Gen Z, millennials, and Gen X. 

  

Beyond the Coffee Bean: Rethinking a Dominant Force

Coffee remains king, but perhaps more undisputed than it once was. While Starbucks' recent quarterly earnings suggest a potential softening in coffee sales, it's essential to look beyond the headlines. Specialty coffee is still a powerful draw, with 80 percent of respondents ordering specialty beverages from coffee shops. However, the market is evolving.

Here's how you can mix up your beverage strategy:

• Diversification is Key: While four out of five respondents are most likely to buy coffee when purchasing a beverage, younger generations crave soft drinks and house-made specialty beverages more. Consider seasonal flavors, cold brew variations, and creative blends to cater to a broader range of preferences.
• Embrace the Health Craze: Consider incorporating trendy non-coffee options like energy drinks or health-focused sparkling waters. A majority of respondents ranked health benefits such as protein or antioxidants as “most important” when considering a beverage purchase. 
• Loyalty is Key. By offering a diverse and high-quality drink selection, you can foster customer loyalty and ensure your restaurant remains a beverage destination, particularly since a majority of respondents grab a beverage at least once a week. 

Building Check Across All Channels 

We found that beverage preferences vary by category, customer, and channel. Consider these tips to optimize beverage sales for your restaurant type and across all its channels. 

• Remain Price-conscious: Price matters in fast-food and fast-casual restaurants, ranking second among the factors customers consider. Restaurants in the category should consider value pricing strategies for their beverage menu. 
• Remember the Value Equation: Survey respondents are less price-sensitive when treating themselves to a specialty beverage at a full-service establishment. Fine dining restaurants can make the most of each visit by focusing on the premium experience, highlighting unique flavors and potential health benefits, and experimenting with seasonal mocktails or other creative ways to elevate the dining experience and justify a higher check. 
• Leverage Delivery: Upselling specialty drinks before checkout on your restaurant app can significantly boost revenue for delivery orders. Use targeted advertising and promotions to capture the attention of less price-sensitive delivery users.

In today's economic climate, maximizing customer revenue is vital for restaurant success.  The RMS survey sheds light on the significant and often overlooked opportunity that specialty beverages present.  By implementing the strategies outlined above and utilizing restaurant data analytics to gain customer and competitive insights, operators can transform beverages from a side note to a strategic check driver. In a market where every penny counts, leveraging the power of specialty beverages can be the secret weapon your restaurant needs to thrive.