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Liquid assets: Restaurant owners tap craft beer’s profitable power

Liquid assets: Restaurant owners tap craft beer’s profitable power

When President Obama hosted a “beer summit” on race relations over a few cold ones this summer, wags likened the White House Rose Garden to a beer garden. But for a growing number of restaurant operators and their customers, it’s no joke at all to see the once-plebeian drink hoisted in the highest circles.

The beers quaffed in increasing numbers everywhere from gourmet-hamburger spots to casual-dining eateries, trendy gastropubs and white-tablecloth restaurants are far from the same old suds. They tend to be “craft” beers made by small breweries using traditional methods and flavorful ingredients, drawn from lists surprising in their selection, variety and quality. For recession-weary consumers, they’re an affordable taste of luxury.

“Beer is the drink of choice in restaurants when the economy is down,” said Steve Tindle, wine and spirits director of Shaw’s Crab House in Chicago, one of the Lettuce Entertain You Enterprises Inc. eateries based there. “Instead of having that $13 martini, a guest may have two $7 beers.”

Tindle has boosted his beer sales by about 15 percent this year by replacing a selection of largely mainstream beers with higher-end craft brands that appeal to discriminating beer drinkers. He made the change when he noticed beer sales rising and wine sales dipping slightly.

Shaw’s 10-tap, 12-bottle beer selection includes the Belgian ales Chimay Cinq Cents and Saison DuPont, priced at $11.50 and $10.50, respectively. These brews are more apt to be found at trendy beer bars than at fine-dining restaurants with extensive wine lists. There is also a selection of American craft beers from the city, region and nation, priced from $6.50 to $9.

“We decided to appeal to the person who is interested in drinking nice craft beers instead of having a list of American lagers that all taste the same,” Tindle said.

The economy’s prolonged doldrums have furthered beer’s rise to prominence, observers say. But there’s more to it than just being a cheaper option than wine and cocktails. Actually, craft beer appeals to people willing to spend extra for food and beverages of quality. According to GuestMetrics and Nielsen information put out by the Brewers Association, the craft-beer drinker has an average restaurant check of about $60, compared to $44 for the premium-beer drinker.

Also helping boost beer’s popularity is the blossoming of the U.S. craft-brewing industry. It broke the 1,500-brewery mark this year, the highest total in a century, according to the Brewers Association. Sales of craft beer grew by 10 percent in the first half of 2009, compared to a 1.3-percent drop in overall beer sales.

The proliferation of craft beers is nurturing a savvier consumer.

“Five or six years ago, we had to explain to people the difference between lager and ale or between pale ale and India pale ale,” said Rich Higgins, a craft brewer and restaurant beer consultant in San Francisco. “These days, they ask which yeast is in the beer or whether it’s Eastern Belgian- or Western Belgian-style.”

Higgins foresees a day not too far off when it will be routine for a fine-dining restaurant to name its beer expert on the menu alongside the chef, sous chef and sommelier.

A slate of 15 specialty beers is at home even in a concept as wine-steeped as Chicago’s Pops For Champagne, which offers more than 100 kinds of Champagne and sparkling wine.

“I don’t think people are surprised to see [craft beer] here,” said wine director W. Craig Cooper, who explains that Pops is not losing focus on bubbly, but rather just aiming to please all comers. “The person who drinks good beer is getting accustomed to finding it in more places.”

Over the past year, Cooper has gradually replaced familiar premium brews with unusual offerings, such as sparkling ale from Australia, Michigan porter, Czech dark lager and Belgian ales. Most are priced between $7 and $10.

“It’s to the point that the better I make the beer list, the more beer I sell,” Cooper said.

Pouring on the promotions

In the greater chain restaurant world, however, $2 and $3 beer specials are far more common than double-digit rarities. In fact, many operators are putting greater emphasis on promotions of beer and other alcoholic beverages during the recession. They’re reducing prices and foregoing some of the ample profit margin of alcohol in the hope of attracting greater sales in the long run.

“That is what Ruby Tuesday is doing with their $5 cocktails,” said David Henkes, vice president of Technomic and head of the Chicago-based research firm’s on-premise beverage practice, referring to the casual-dining chain’s new premium-cocktail program. “They’re taking a hit in margin, but if they sell as much as they are projecting, they’ll make it up in volume.”

Hence the plethora of deals dangled at price-conscious consumers.

“People are way, way more selective about spending their dollars than before,” said Michael Sanford, president and chief executive of the Greene Turtle Sports Bar & Grille, a 23-unit casual-dining chain based in Edgewater, Md.

In Sanford’s view, recent beer industry consolidation has made major brewers and distributors more eager to support operators with promotions. The big brands also have hastened to one-up each other with new niche products, like ultra-low-calorie beers aimed at fitness-conscious consumers and lime-flavored light beers that appeal to young adults. Both have found a home on his beer lists.

The Greene Turtle has a roughly 60-40 ratio of food-to-alcohol sales, higher on the beverage side than many of its segment peers. In addition, it sells more than twice as much beer as wine and spirits combined. Making that possible are the relatively large bar areas of its restaurants, which on average take up about a third of the total front-of-the-house space. That allows ample storage room for 22 taps and about the same number of bottles.

“We might have four or five beer coolers behind the bar in addition to some beer tubs and beer wells for bottles on ice,” Sanford said.

That’s something that other casual-dining chains are hard-pressed to match because they have scant storage at the bar, he said.

In addition, the chain courts value-conscious consumers with a Beef Up Your Beer table tent that invites them to upsize a standard pint of draft beer into “a 22-ounce relief package” for $1 extra. For crafts and imports, the upsize costs an extra $1.50.

“We get a little increase of sales, although not quite at the same margin, and we’re delivering something that customers see as value,” Sanford said.

The Greene Turtle merchandises beer and food in tandem in its Greene Turtle Playbook, a football-theme tabletop menu with a colorful photo spread of American premium, import and craft beers paired with casual fare, such as Pulled Pork Sliders and Buffalo Chicken Pizza. Fostering customer loyalty as well as beer sales is the Greene Turtle Mug Club, which rewards members with their own numbered ceramic beer mugs displayed behind the bar and good for $1 discounts on beer.

At Ruby Tuesday, the dealing goes beyond the aforementioned $5 cocktails. The Maryville, Tenn.-based chain of 896 casual-dining restaurants, which has been working to upgrade its image, also vigorously promotes craft beers. Its company-approved craft beer list, keyed to local favorites in its markets, numbers more than 55 choices. Included are brands such as Dogfish Head 60 Minute IPA, Abita Turbodog and Brooklyn Brown Ale, which are less commonly found in casual-dining restaurants, according to the company.

“Ruby Tuesday wants to have the best craft-beer selection in the segment,” said Ken Lennox, director of beverage.

He added that the restaurants use a true 16-ounce pint glass, not a smaller look-alike version. They offer a Draft Beer of the Day for $3 and upsized drafts for 99 cents. Some locations also have a bar-only $1 draft beer discount at happy hour.

Going upscale

Beer is also making a splash in upscale restaurants, a segment that until recently took little notice of it. Today, some of the country’s most prominent chefs are staging white-tablecloth beer dinners and launching informal brasseries and taverns that combine chef-driven fare with elevated suds.

“It seems that beer is going to perform better than some of the spirit and wine categories, and a lot of the celebrity chefs are focusing on that,” said Technomic’s Henkes.

Chef-owner Daniel Boulud, head of the restaurant empire that includes the posh Daniel in New York City as its flagship, hit pay dirt again last year with the opening of DBGB Kitchen & Bar, a new concept there that blends elements of a French brasserie and an American tavern and offers a large beer component.

Sommelier Colin Alevras assembled a list of 22 drafts and a couple dozen bottled craft beers from the United States, Germany, France, United Kingdom, Belgium, Austria, Denmark, Italy and the Czech Republic.

“I was curious whether there were beers that could excite me as much as wine,” Alevras said. “The answer is yes. There is some really great stuff out there.”

In his opinion, some of the most intriguing brews are from Italy. One has fruity nuances because it is spiked with grape must, and another has an intensely floral character because it is bittered with wormwood flowers rather than hops.

Most of the bottles are “large format,” or 750 milliliters in size, like standard wine bottles, and served in a similar manner.

“I open it on the side, taste it and pour some for the guest to taste,” Alevras said.

To encourage beer and food pairing, Alevras sought beers with flavor profiles that are compelling but not overpowering. A typical match is British porter with the DBGB shellfish platter.

“People see oysters and think of a very pale white wine,” Alevras said. “But you give them this dark beer and it’s surprisingly good.”

One of Chicago’s most anticipated recent restaurant openings was last fall’s launch of The Publican, a beer-focused eatery created by executive chef-partner Paul Kahan and the team behind the prominent local restaurants Blackbird and Avec.

The Publican has filled a niche, welcoming more than 300 guests on its busiest nights for simple farmhouse fare like potau-feu, house-made charcuterie and country ribs. Washing it down are selections from a wide-ranging beer list that numbers 12 on draft and more than 85 in bottles, including some priced as high as $50 for a 750-milliliter size.

“I am surprised every day at how well customers who grew up drinking macro lager accept and love beers with acidic, sour and smoky flavors,” said beer director Michael McAvena.

At Gramercy Tavern in New York City, part of the Union Square Hospitality Group, it doesn’t take much urging to sell patrons on beer-and-food pairings such as housemade kielbasa with dark German wheat beer or cheese platters with barley wine, a rich, heady ale, reported managing partner Kevin Mahan.

Fifteen years ago, Gramercy was one of the first fine-dining restaurants to promote craft beers. Today it offers eight craft brews on draft hailing from New York, Michigan, California, Quebec, Maine and Pennsylvania, priced at $8 per pint. There are 22 bottled choices from Belgium, Japan, Finland and Italy as well as the United States, priced from $9 to $31. The zenith of the list is a page of two-dozen rare vintage beers from North America, Europe and Japan, ranging in price from $14 to $47 per 750-milliliter bottle.

Gramercy’s list has a spectrum of flavor profiles to accompany various menu items.

“If you’d like a cleansing ale before dinner or something on the darker, heavier side with dessert, we have it,” Mahan said.

Speaking of diverse styles, the beer list of the new Bar Symon in Avon Lake, Ohio, is broken into such sections as “Dark, Rich Full,” “Hop Driven Beers” and “Tart, Sour, Funky.” The American brasserie, restaurant No. 6 for Cleveland-based chef and TV personality Michael Symon, sports 40 taps and 100 bottles, encompassing local and regional favorites and classic brews from around the world.

Guests are apt to pair the signature Symon Burger, which is topped with fried egg, cheddar and bacon, with a tart Belgian lambic beer spontaneously fermented with wild yeasts.

“Sour, higher-acid beers and oak-aged beers that go well with fatty proteins have been a home run for us,” said director of beer Joseph Allerton.

Some observers doubt, however, if the influence of Boulud and other beer-fancying tastemakers will lead to an increase in the selections of unusual craft beers at chain restaurants.

“When you deal with anywhere from 50 to 1,000 locations, you have to be in the mainstream and you can only bounce outside a little bit,” said Mark Vidano, vice president of operations for MarkeTeam Inc., a Mission Viejo, Calif.-based sales promotion agency. It’s possible to offer some local beers, “but you have to stay true to your guests coming in.”

Crafting the ideal beer list

But smaller chains, such as those in the booming better-burger segment, see craft beers as a way to differentiate their concepts.

For instance, The Counter, a Culver City, Calif.-based chain of 23 build-your-own burger places, offers at its various locations beer lists sprinkled with locally popular craft beers. Lists typically comprise six drafts and 10 bottles priced from $4 to $6.

“We want the restaurants to be as individual as possible, just as we want customers to build their burgers the way they want,” founder Jeff Weinstein said.

Another sign of the times is the rise of gastropubs, a term coined by the British for drinking establishments with food better than the usual pub fare. In the United States, the term is applied loosely to a growing number of varied food and beverage concepts.

“Our goal was to run a chef-driven concept and serve only craft beers,” said Todd Rushing, a partner in Atlanta-based Concentrics Restaurants, explaining the rationale of Tap, a gastropub there.

Tap draws crowds with 28 draft and 60 bottled beers and menu offerings, such as steak frites with green-peppercorn sauce for $17 and a seared-tuna sandwich on rosemary focaccia for $9. Each beer brand is served in its own individually logoed glass in the Belgian way, intended to help bring out the nuances of each brew, Rushing said.

At Rush Street in Culver City, Calif., co-owner Brian McKeaney said his casual restaurant and bar has a gastropub feel “with a great draft beer selection, eclectic wines and food with a gourmet touch.” On the average Friday or Saturday night, the place serves 300 to 350 covers.

“We love our hefeweizens and especially dark beers here,” McKeaney said.

Also popular is the “Share Freely” section of the beer list with 14 beers in 750-milliliter bottles, from brewers in Belgium, Britain, Japan, Canada and the U.S., priced from $11 to $19.

“They go over well here,” McKeaney said. “People share them like a bottle of wine.”

The biggest question facing operators is whether customers will remain keen on beer as the economy recovers. In Rushing’s view, the answer is yes.

“You’ll have better-educated consumers who have been drinking good beer for a few years,” Rushing said. “So why change?”

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