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Tapping into Craft Beer

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From local pubs to high-end resorts, craft beer positively impacts price points.
By Jim Galligan May 2013 Beer

Even if you’ve never been to Rhodes North Tavern in Sloatsburg, New York, you probably know a place like it: a bustling local restaurant and bar that serves a hodgepodge of well-made comfort foods and has live music on the weekends.

You might not expect craft beer to find an eager audience among the young families, baby boomers, and working people who frequent the place, but that’s exactly what happened about 18 months ago, when Rhodes decided to extend its on-tap offerings to include craft beers.

“People were asking for craft beers, and we knew it was time to give it a try,” says Jenny Rhodes, who manages the restaurant and tends the bar. Of the 22 beers on tap, about half of them are now from craft breweries.

“Bar sales overall are definitely up since we added craft beers,” Rhodes says. “They’ve become a big part of our business.”

What’s happening at this family-owned tavern demonstrates how demand for craft beer is reshaping the beverage landscape at restaurants large and small.

“2012 saw craft beer sales grow 10 percent in bars and restaurants, with 7 percent of that coming in sales volume, and the other 3 percent from increasing prices,” says Peter Reidhead, vice president of strategy and insights for GuestMetrics, a service that collects guest check data every night from thousands of restaurants and bars across the nation. “A portion of these gains have been at the expense of imports and mainstream American beers,” he says, “all of which saw their sales slip in the same period.”

Rising sales of craft beers should make restaurateurs happy, because craft beer drinkers tend to spend more money than people who drink Budweiser, Miller, and Coors.

According to GuestMetrics, the average guest check that includes food and a mainstream American beer is about $73.00, while a craft beer drinker’s food and beverage check rings in at $86.00. Only a part of this $13.00 incremental spending is due to the price differences between the beers.

“Craft beer drinkers tend to spend more on other stuff,” says Reidhead. “They provide revenue to the restaurant at a faster rate than their premium American beer and light beer drinking counterparts.”

GuestMetrics has created an interesting yardstick—money spent per minute—by taking the average dollar amount of a guest check that contains both beer and food, and then dividing that number by how long that check is open.

The average mainstream beer drinker spends $0.80 per minute at a restaurant, while the craft beer drinker spends $1.00 per minute. That’s right: Craft beer drinkers spend at a 25 percent higher rate.

While import drinkers spend the most—Heineken drinkers spend $1.25 per minute and Stella Artois brings in $1.05—this segment is shrinking as craft beer continues to gobble up market share.

Stealing Share

If there’s one restaurant brand that has its finger on the pulse of draft beer sales in America, it’s Buffalo Wild Wings.

“Buffalo Wild Wings is the number one draft account for more than 50 brands of beer amongst chain restaurants,” says Andrew Dismore, vice president of food and beverage experience for Buffalo Wild Wings. “Right now craft beer makes up around one-third of our total beer sales, ranking below mainstream American beers, but outselling imports,” he says. “Craft beer is growing, too, stealing share from both.”

Patrick Kirk, Buffalo Wild Wings director of beverage innovation, says his chain’s experience jibes with the GuestMetrics data, and that the average guest check amount is going up as craft beer becomes more popular.

“We see people trading up to craft beer, and we’re using education to help foster the move,” says Kirk. “Our servers are very knowledgeable about all the beers we offer and do a nice job of encouraging guests to try something new.”

All Buffalo Wild Wings locations have between 24 and 30 taps, and each restaurant offers a standardized set of craft beers, mainstream brands, and popular imports—which makes for a consistent experience from restaurant to restaurant and allows for national promotions.

“The mainstream beers are great for game day, when guests want to have a couple of beers as they watch the game without spending a lot of money,” says Kirk. “On the other side of the coin, our craft beers allow us to embrace the beer renaissance that’s happening in America and hopefully become a destination for people to try new styles and flavors,” he adds. The imports are mostly used as celebration beers, popular for events like Cinco de Mayo and St. Patrick’s Day.

Each location also has space reserved for local beers and a manager’s special, which are usually of the craft variety. “We look to add in beers that are part of the local fabric,” says Dismore. “Our beer selection is really driven by what our guests want and what turns the kegs over fastest, allowing us to serve our beers as fresh as possible.”

They take their beer seriously at Buffalo Wild Wings. Everyone who is involved with the beer program at the management level is a Certified Cicerone, meaning they’ve gone through extensive training on the do’s and don’ts of storing, selling, and serving beer. These best practices affect which beers are offered in the restaurants, how beer is stored, and how the staff is trained to talk about beer and serve it.

“We take great pride in the way we handle our beer,” says Kirk. “From the truck to the tap to the glass, we work hard to do everything we can to make the beer taste the way the brewer intended.”

Proof Craft can Scale

While it might seem natural for a wing joint to be a little obsessive about its beers, it might not be something you’d expect from a five-star resort.

Last November, the Four Seasons Resort Scottsdale at Troon North opened Proof, an “All-American canteen” where they cook with beer, offer food-pairing suggestions, and will even make an IPA ice cream float.

“We listened to what our guests were saying, and we delivered on it,” says Proof’s general manager Graham Williamson, who led the concept planning and design for the new restaurant.

Proof started as a renovation to an underperforming restaurant at the resort, but quickly turned into a clean-sheet concept—one that was aimed at solving a problem.

“We found guests were visiting each restaurant on our property once during their stay,” Williams says, “and then wandering into town to find someplace that’s a bit more funky and casual.”

The interior of Proof is rugged, bright, and modern, with nods to local hiking trails like Pinnacle Peak and the area’s railroad heritage, including tables that can be trucked outdoors on tracks so patrons can take advantage of the resort’s mountain vistas. There’s a soda fountain for the kids, a shuffleboard table, and 15 televisions so people can hangout and watch the game.

While the fun atmosphere might be enough to get guests through the door once, the food and beverage offerings are designed to keep them coming back.

“The idea is to put so many craveable dishes on the menu and so many tempting beers on display, guests have to come back to try them all,” says Bryan Feigenbaum, food and beverage director for the resort. He describes the menu concept as “inventive and approachable American comfort food.”

Proof offers 50 beers, a number chosen to honor the 50 states. There are six beers on tap, which account for about 70 percent of sales, and 44 more in bottles and cans, which are prominently displayed behind the bar in hopes of piquing the interest of beer-curious guests.

“Local” is a big part of the Proof concept (even the bottled water comes from a local source), so it’s no surprise that three of the six taps serve local Arizona craft brews. The best seller is Proof Pilsner, a German-style lager that’s custom-brewed for the restaurant by the Lumberyard Brewing Company in Flagstaff. The other three taps keep the canteen’s all-American theme chugging along with one craft beer from the East Coast, one from the West Coast, and one from the Midwest.

Proof is the first restaurant to offer craft beer on tap at the Four Seasons in Scottsdale. It’s been so successful that there’s talk of adding taps in some of the hotel’s other restaurants, and even the possibility of exporting the Proof concept to other Four Seasons locations.

Since Proof opened, craft beer sales have become a new revenue stream for the resort and have provided an unexpected boost to beverage sales, which is exactly what happened at the previously mentioned Rhodes North Tavern. Rhodes has no computer system to provide data on beer sales, no lofty concept behind the restaurant, and no director of beverage innovation to choose what’s offered on tap. What sells stays, and what languishes in the kegs is swapped out for something that might be more popular.

But just like Patrick Kirk at Buffalo Wild Wings and Bryan Feigenbaum at the Four Seasons, Jenny Rhodes and her team are listening to their customers and reaping the rewards.

Everybody wants craft beer,” Jenny says. “We’re just giving them what they want, and it’s worked out very well for us.”