Booze To-Go Is Here to Stay
Americans are outsourcing beer runs and drink pickups as loosened laws become permanent; ‘We are doing it everywhere it’s legal’
Source: https://www.wsj.com/
By Heather Haddon
May 29, 2021
It became easier than ever to order booze on the run during the pandemic, as restaurants added cocktails to their to-go menus and delivery apps ramped up alcohol delivery.
Now, many of the relaxed rules that allowed it all to happen are becoming permanent, and the race is on to dominate the market for alcohol on demand.
Alcohol generally is more profitable than hot meals, so companies like Grubhub GRUB -0.17% and Uber Eats that struggle to make money delivering food are hustling for the business. But they face fierce competition. Supermarkets are selling six-packs for pickup and delivery. Restaurants are investing in high-end takeout drinks. Established online alcohol sellers such as Minibar Delivery and Wine.com thrived during the pandemic.
Sales of booze on delivery apps and platforms more than tripled last year compared with 2019, an analysis of credit- and debit-card transactions by Earnest Research shows. Liquor sales at food retailers grew 27%, according to NielsenIQ.
More than 30 states and Washington, D.C., last year loosened rules limiting to-go drinks from restaurants and bars during Covid-19 lockdowns, and some allowed delivery companies to carry the drinks as well, according to the Distilled Spirits Council of the United States, a trade group that pushed for the changes. More than a dozen of those laws have become permanent, with more on the way, bringing widespread changes to alcohol delivery and takeout across the country.
Some delivery companies are spending to grab as much of the market as new rules allow.
“We are doing it everywhere it’s legal,” Grubhub Inc. chief executive Matt Maloney said of alcohol delivery.
Delivery apps are striking deals to get further into alcohol sales. Uber Eats parent Uber Technologies Inc. reached a deal earlier this year to buy alcohol-delivery service Drizly for $1.1 billion in stock and cash, and payment-processor Square Inc. this month partnered with DoorDash to deliver booze.
Drizly has navigated the complex local rules around alcohol delivery already, and will allow Uber to expand into the high-margin category faster than on its own, the company said. The delivery company will eventually integrate Drizly into its Eats app, while also allowing it to keep its independent service, Uber said.
Paula Lorena Pérez, a 25-year-old medical student in San Antonio, Texas, tried alcohol delivery services for the first time during the pandemic. Ms. Pérez and her fiance are now hooked, particularly since the services offer a variety of things like hard seltzers that they can’t find in area convenience or grocery stores.
“We will definitely be keeping up with these services mainly because I love the inventory,” Ms. Pérez said.
Takeaway cocktails were a higher-margin lifeline for restaurants made reliant on delivery and carryout last year. The labor involved in mixing a drink, for example, is typically less than cooking a hot meal. Around seven out of 10 full-service restaurant owners said they started offering alcohol for takeout or delivery, according to a survey of 6,000 operators by the National Restaurant Association trade group. Twenty percent of takeout customers surveyed said they added alcohol to their orders, while 18% of delivery customers did.
Kimberly Solomon, a 41-year-old attorney from Austin, Texas, said she started ordering to-go margaritas and sake last year and plans to keep doing so now that the state has allowed takeaway alcohol permanently. Takeout for dinner for two with drinks can cost $100 to $250, she said, but saves her from paying a babysitter. She’s avoiding delivery for now to give more of her money directly to restaurants.
“We often get a drink that was tailored to our meal, just as we would if we were dining out,” she said.
Delivery companies have less share of the market for to-go cocktails than for meals from restaurants, according to estimates from industry-firm Black Box Intelligence. Many states require that a to-go order include more food than booze, and not all states allow delivery apps to sell to-go cocktails.
Liability and safe-handling rules for alcohol have discouraged some delivery companies from transporting cocktails in parts of the country. Uber Eats hasn’t delivered to-go cocktails in California, for example, because the state requires that they be transported in a locked trunk in most circumstances and many couriers don’t use cars, a spokeswoman said.
Alcohol delivery from restaurants will likely remain a small share of overall sales, but can help bring in new customers and is generally positive, said Victor Fernandez, Black Box’s vice president of insights and knowledge. Liquor accounted for 14% of sit-down restaurant sales prior to the pandemic, according to Black Box figures. When the crisis hit, that revenue plummeted.
Since the end of prohibition in 1933, Congress has largely left it up to states to regulate alcohol sales and distribution. That’s led to a patchwork of rules across the U.S. and quirks influenced by local constituencies. The ability to take cocktails away from a restaurant or bar was rare, though Florida and Mississippi allowed to-go cocktails with restrictions-as did, famously, New Orleans.
Trade groups appealed to state houses to loosen alcohol restrictions when the pandemic shut dining rooms.
But not everyone is a fan of the new rules. Critics of the bills to make to-go drinks permanent worry that the loosening of liquor laws will make it easier for young people to consume alcohol. Others say that states are moving too fast to undo liquor laws that have been in place for decades in the face of pressure from trade groups seeking to capitalize on the pandemic.
In New York, liquor store owners are pushing to revert to the old rules, with the backing of a coalition of law enforcement unions worried about the potential increase in drunk driving. A temporary allowance to serve take-out drinks, which is currently authorized by an executive order signed by Gov. Andrew Cuomo, expires June 5.
Some with concerns about the new laws have asked states to make sure that authorities enforce identification requirements and safe handling guidelines to curb drinking and driving. In Georgia, for example, state police and the division overseeing alcohol are starting a campaign later this year to enforce open container laws, a spokesman for the state Department of Revenue said.
With to-go booze, there’s a lot at stake for store-owners too. Retailers logged big sales increases on alcohol in the past year but face competition from alcohol delivery companies eager to reach customers beyond bricks-and-mortar settings. Some stores are responding by selling alcoholic slushies and other drinks to in-store customers, some trade groups said. Other retailers are partnering with delivery companies to try to satisfy their customers’ interest in convenience.
Several chains are investing in cocktails for takeaway and delivery even though their dining rooms have reopened. Applebee’s said it is offering a $5 takeaway cocktail deal online where permitted. Outback Steakhouse has been testing to-go cocktails, and plans to start selling takeaway margaritas in Mason jars from 230 restaurants this summer, according to parent company Bloomin’ Brands Inc. The company hopes to use its own drivers to deliver the cocktails where allowed.
Gary Cohen, executive vice president of Glory Days Grill, a chain of 39 restaurants across six states, said demand for to-go mixed drinks remains higher in places like Florida, where state rules are more permissive.
“Our managers in Florida have been selling margaritas and sangria by the gallon,” Mr. Cohen said.
Craft-cocktail bar owner Death & Co. hunted for labels, bottles and recipes for cocktails consumed off-site in the pandemic, national beverage director Tyson Buhler said. Death & Co. used app-based companies to deliver its drinks last year, but Mr. Buhler said the bars suspended the service about two months ago because of the commissions they charged.
For now, Death & Co. bars are selling batches of cocktails in sealed containers for roughly $30 for three servings to customers in New York City, Los Angeles and Denver-for carryout only.
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