Before COVID-19, checks with at least one beer had an average value of $43; this has now risen +17% to $50. This dynamic is even more significant for spirits: checks containing at least one spirit used to average at $49. This has now risen to $61, equating to a staggering +24% increase. These jumps in check value data shed light on several new on-premise consumer trends: maximizing the occasion, trading up / premiumization and the wider ‘treat’ mentality.
Opportunity: Engage with Guests, Tap into ‘Treat’ Mentality
Above all else, Nielsen CGA’s BeverageTrak and consumer data highlights how COVID-19 has forced a change in consumer behavior and spend, requiring strategic action from on-premise businesses. With four in five (79%) on-premise visitors now staying in a single venue or reducing the number of places they visit, there is a rare opportunity to engage with guests for longer and tap into the ‘treat’ mentality that’s driving sales. This is emphasized by the 53% of consumers who agree that they are now more likely to treat themselves on bar or restaurant visits than they were before the pandemic.
Unsurprisingly, alcohol–particularly beer and spirits–plays a key part in driving spending in on-premise outlets. For all checks–factoring in both those with and without drinks–Nielsen CGA’s BeverageTrak data revealed that they currently average at $38; -23% less than those with beer. For spirits, it’s a staggering -37%.
With fewer opportunities to go out, consumers are pushing for the best experience possible with each outing; ordering an extra drink is proving to be a good way to treat themselves. The emerging trend of premiumization will also play a big part in driving spend, with two in five (39%) on-premise visitors saying they are now more willing to trade up to a premium drink while out than they were before COVID-19. This number soars to 58% among 21 to 34 year-olds.
Hard Ciders Boost Check Value 81%
Nielsen CGA’s BeverageTrak data also revealed the subcategories driving the highest average check value. Across key U.S. states (New York, Illinois, California, Texas, Florida, Georgia, Colorado, New Jersey and Michigan), the average value for checks containing vodka is up +36% vs. pre-COVID-19 norms, followed by tequila (+32%), whiskey (+29%) and rum (+28%).
For beer, import leads in driving average check value at +23%, followed by craft (+22%) and domestic premium (+21%). In alternative categories, cider is also performing well, pushing the average value up +20%; however, this is dramatically overshadowed by hard seltzers, which are pushing the average check value up +81% vs. pre-COVID-19.
To tap into these trends and drive revenue, retailers and suppliers must have a strong understanding of the brands that are valuable and popular with consumers. Further, bartenders and wait staff need to be equipped with knowledge of brands that encourage trade-ups or give consumers the feeling of a treat. With well over half (62%) of visitors agreeing they are likely to add a higher tip than before COVID, this dynamic is a positive one for consumers and staff alike.
“There are many challenges facing on-premise retailers during these uncertain times, and in areas where new restrictions are emerging, these challenges are only going to be multiplied as we approach the winter months,” Nielsen CGA Client Solutions Director Matthew Crompton said.
“For those that can remain open, however, our data shows that premiumization is taking on new meaning during this pandemic. ‘Treat’ spend is a very real thing for consumers, and on-premise operators can capitalize on that by offering clear trade-up options, particularly from an alcohol assortment perspective.
“With checks 17% higher than pre-COVID times, we can see that spirits in particular are helping drive this,” Crompton said.