As commodity costs rise and restaurant margins are squeezed further, many restaurants were hoping that consumers would continue to be thirsty for high-margin drinks. Unfortunately, in 2011, consumers purchased 846 million fewer carbonated soft drinks; in the past five years, overall drink orders are down by 5%. Restaurants are trying a variety of techniques quench their patrons’ thirst: introducing new drinks, adding table signage, promotions, encouraging servers to cross-sell, etc. As restaurants try to boost ailing drink orders, they should analyze three key questions:

(1)    How do we successfully introduce new drinks?

While the overall drink trend is headed downwards, new items such as smoothies, iced tea, and premium coffee are reporting increases in sales. As restaurants introduce new items, they need to carefully analyze how the addition of a new drink changes both total check margin and operational effectiveness. The introduction of items such as smoothies may lead to increases in preparation time and corresponding decreases in guest satisfaction and added labor cost. These operational problems in new drinks are particularly acute in QSRs where people are waiting in line for their orders. Restaurants need to carefully understand the all the dimensions of introducing a new drink before rolling it out to their network.

(2)    Which drinks should be removed?

Some drinks may show low sales and may even get lower satisfaction ratings, but removing them may lead to loss of the entire check. Successfully rationalizing the drink menu requires understanding the patterns of how guests combine drinks with other menu items. In addition to carefully analyzing which drinks are most likely to be chosen as add-ons, restaurants need to accurately quantify the total impact of removing or replacing existing drinks, including mix shifts into other drink items and changes in drinks per check. Learn more about how to build a successful drink menu by clicking here.

(3)    How should drinks be promoted? Many restaurants traditionally run several drink promotions, especially on alcoholic drinks. However, restaurants often struggle to understand the impact of these promotions. A number of questions need to be answered before successfully launching a drink promotion: What is the impact on profits? Does it bring in incremental guests, or are we losing margin on existing customers? When (days/time) should we offer promotions? At which locations do promotions offset margin losses? Read more about how restaurants can successfully answer these questions before introducing a promotion.

As guests fill up on tap water in a weak economy, getting them to buy drinks will not be easy. The best way to make the right decisions about these critical questions is to test drink changes in a small group of restaurants before rolling them out broadly. Click here to read more. Cheers!