Let’s be honest, even as we ask this question, we know that we probably don’t want to sit in a restaurant reading a menu without anything to drink. It gives us something to do and in the case of alcohol, it helps us relax, leading to a more pleasant evening as long as we drink in moderation. But, you can bet, if you respond to the question “would you like anything to drink” with “just a water, please,” your waiter is going to be a bit disappointed. Even an upsell from tap water to a club soda or Perrier is better for business than plain water.
In fact, you are just as likely to be asked, “would you like something from our bar?” This is a much more leading question and it clues you in to what the waiter, and the restaurant owner, wants you to order. Even in the case of fountain sodas, the profit margin is good. But alcohol, especially hard liquor and wine by the glass, is the highest profit margin available to any restaurant owner with a liquor license. Beer is not a bad source of revenue either, especially when it comes from the draft, which, even with spillage and waste, provides a higher profit margin than beer by the bottle. Regardless, alcohol in any form is the single best way for a restaurant to make money. As well, the increase in total ticket amount can result in higher tips for the waiter.
Would You Like to Have a Drink at Our Bar While You Wait?
This is also why, if you are waiting for a while to get a table, a smart restaurant with a bar will ask you whether you would like to sit at the bar and have a drink while you wait.
There are practical reasons for all of this, of course. Even if drinks were not so profitable, they would still be a quick way to give your guest something to occupy themselves with while they peruse the menu. Complimentary bread has much this same function and there is no profit in it at all. Except, that is, in guest satisfaction. See:
Should You Never Eat Complimentary Bread at Restaurants.
A restaurant which serves alcohol wants you to drink. They make more money and the more you drink the more you eat. The more you eat, the more you drink. In fact, if you are willing to sit awhile and continue to order drinks, the need to turn quickly turn the table may vanish. This is why, especially in pub-style restaurants, after you have finished your meal and dessert, your waiter may ask if you’d like to stay a while and have some more drinks. If you say no, your check will appear quickly! It’s time to get that table filled again. But if you want to stay and drink, you suddenly have an extended invite.
But, let’s return to beer for a moment. Today, we see more and more restaurants with an extended offering of craft beers, most of them bottled. This is actually a much more difficult way for a restaurant-bar to make money. You have to deal with a large inventory of beer, much of which may not sell. So why do it? Because it fits the experience you want to give your guests! That beer menu may be just what draws your guests.
So, while pushing alcohol on you is certainly motivated by profit, profit is not the sole consideration. By focusing on the profit from alcohol, many food and restaurant writers assume that serving alcohol in a restaurant is a no-brainer! However, just as there are many advantages to serving alcohol, it introduces many potential headaches.
Liability When Serving Alcohol
Serving alcohol in a restaurant increases your liability. When people get intoxicated, mishaps happen, and sometimes bad accidents. If someone becomes intoxicated in your restaurant and then gets hurt or causes someone else to be hurt, this could result in legal actions against your restaurant. You could even end up losing your license and having to close your business.
So, the next time someone tells you “all they want to do is pour alcohol down your throat,” know that this is certainly not what they want if they have any sense at all. While the more you drink the more money a restaurant makes, they don’t want you to become extremely intoxicated and rowdy and impact the enjoyment of other guests, and they do not want you to drive drunk and get in an accident. Yet, in a busy restaurant, this can be difficult to monitor.
The staff must be trained in the local laws governing the serving of alcohol so this increases training costs.
Theft and Loss
Another huge disadvantage to serving alcohol in a restaurant is the difficulty in managing loss and theft. Drinks can be over-poured, thus pouring away your profit. Cash can be siphoned at the bar such as by drinks being sold but not entered into the point of sale system (or cash register for older folks like myself). Employees may swipe bottles. In short, serving alcohol opens up a huge can of worms. This requires greater attention to systems and more monitoring by management, as well as careful employee vetting.
Obtaining a liquor license can be a huge investment in time and in money. Depending on local jurisdiction, it can be a long and demanding process. And it is possible, in some locales, for a liquor license to cost up to $100,000 in total expenses. All the more reason to push the alcohol once you are approved to sell it.
While profit is the primary motivator in any restaurant business, most practices also have a practical side. Anything that enhances the comfort and experience of a restaurant guest has the potential to increase profit. However, most of those things require at least some initial and ongoing investment. Alcohol is no exception.