NEW YORK - While Burger King, White Castle, Sonic and even Starbucks have begun adding alcohol to menus in certain markets, the moves may have generated higher checks, but not without incurring substantial regulatory headaches, writes AdAge.
For QSRs, selling alcohol on a large scale doesn€™t raise margins significantly (at least at first), because of the upfront costs of new equipment, such as coolers and alcohol lockers. As a result, some are rethinking their plans.
Burger King had intended to open alcohol-friendly Whopper Bars in Miami and New York, plans that have now been put on hold.
"This is a flash in the pan," said Harry Schuhmacher, editor of Beer Business Daily. "I don't think that people go into fast-food restaurants with the intention of lounging and sticking around and having drinks." And "in the case of Starbucks, people are looking for a quiet place to go, not necessarily a raucous place to go. And alcohol can sometimes transform the ambiance. I think it's a test, and I think these guys are going to find the risks don't outweigh the benefits."
According to AdAge, the risks are substantial. First, many states require people who handle alcohol be at least 18 years old, a problem for QSRs since many hire minors. Second, many states require special alcohol training for employees, a time-consuming task that often is cost prohibitive for those relying on part-time help.
Finally, local rules often make it difficult for QSRs to sell alcohol in some places. "Fast-food menus would not qualify for licensing as a restaurant because many jurisdictions define restaurants as places that serve entrees, and entrees do not include sandwiches or salads," said Alex Heckathorn, a consultant at Compliance Service of America, a consulting firm providing alcoholic-beverage licensing assistance. "We have to remind clients on a routine basis that hamburgers fall into the sandwich category."
In light of such challenges, why are QSRs even experimenting with alcohol in the first place?
According to Michael Schaefer, global head of consumer foodservice research at Euromonitor International, the recession forced main chains to target consumers on tight budgets who otherwise would look to go out for an informal dinner and beer.
As a result, a Sonic franchisee convinced corporate headquarters to allow it to serve alcohol at two Miami-Ft. Lauderdale locations.
"The franchisee didn't expect [alcohol sales] to be a huge part of the business, but the competition around them offered beer and wine," said Drew Ritger, senior vice president of business planning and purchasing at Sonic.
Starbucks decided to try alcohol at a few of its stores as a means to boost evening sales, when traffic was light.
According to Eric Giandelone, director of foodservice research at Mintel, Starbucks stands a good chance of incorporating alcohol into its stores because "they have so many locations that are in urban or walkable areas that would get nighttime walking traffic."