Episode Transcript
[00:00:00] Speaker A: Hey, everyone, Chip Close here. This is the Restaurant Strategy podcast. Every summer I do something weird. I do a 10 episode arc, all revival, all revolving around a different theme. This year, it's crazy ideas challenging you to rethink, to invigorate, to reinvent, to continue to evolve this industry today. Right? My crazy idea is what do we do when nobody's drinking alcohol anymore? Or what do we do when alcohol sales have dropped? So what is the alternative? Because I will tell you that most restaurants really prop themselves up on that beverage cost, on the very profitable spirits that we sell at 14 or 15% cost because people are willing to pay more to get a buzz. But what happens when people are no longer after that? What do we replace that with? We have to rethink how we approach beverage. That's what we're gonna talk about, how we approach alcohol sales as we gear up for a generation that is not drinking nearly as much. And as the generations passed all of that on today's episode of Restaurant Strategy.
[00:01:01] Speaker B: There's an old saying that goes something like this. You'll only find three kinds of people in the world. Those who see, those who will never see, and those who can see when shown. This is Restaurant Strategy, a podcast with answers for anyone who's looking.
[00:01:32] Speaker A: Hey, everyone, thanks for tuning in. My name is Chip Close and this is Restaurant Strategy. We do two episodes every single week, all meant to help you level up, increase the profitability and therefore the sustainability of your business. I write books, I give talks. You find me on social media, obviously can tune in here. 450 plus episodes and still going strong. I run a coaching program called the P3 Mastermind. By all means, you can learn more about that. There's a link in the show notes. Grab time for a free call with me or someone from my team. I'm also gearing up for the next live event. I do two live events every single year. The next One is the P3 profitability summit. It happens in Fort Worth, Texas in October 2025. If you want to be there, I want you to be there. We cap this event at 100 attendees. It's a tight, intimate room. You are going to level up and learn a ton. How do you manage cogs? How do you manage labor? How do you grow revenue? Actually grow revenue. Catering, private dining, increasing guest check average. How do you get more in the dining room? How do you increase the frequency of visits? How do you get more people talking about you? We cover all of that and it's a series of scripts, playbooks, very tactical. Highly actionable tickets are on sale. You can get general admission or a VIP ticket. You can find that link in the show notes as well.
[00:02:48] Speaker B: Thousands of restaurants across the country use Kickfin to send instant cashless tip payouts directly to their employees bank accounts the second their shift ends. It's a really simple solution to what's become a really big problem because let's face it, paying out cash tips to your workers day after day, shift after shift, it's kind of a nightmare. Tedious tip distribution takes your managers away from work that actually matters. It's sometimes hard to track payments, which leads to accounting and compliance headaches. Plus, cash tip outs create the perfect opportunity for theft. And there's never been, there's never enough cash on hand to pay out those tips.
[00:03:23] Speaker A: So what, what happens?
[00:03:25] Speaker B: Your managers are constantly having to make bank runs. Bottom line, there's never been a secure, efficient way to tip out. Until now. Meet Kickfin. Kickfin is an easy to use software that sends real time cashless tip payouts straight to your employees bank accounts 24 7, 365 tipping out with Kikfin gives managers and operators hours back in their day. It makes reporting a breeze and protects your business from mistakes and theft. And guess what?
[00:03:51] Speaker A: Employees love it.
[00:03:52] Speaker B: So it becomes a really powerful recruiting tool. Best of all, restaurants can have Kickfin up and running overnight. Employees can enroll in seconds. No hardware, no contracts and no setup fees. Get in touch today for a personalized demo and see how restaurants and bars across the country are tipping out with Kickfin. Visit kickfin.comdemo and yes, that link is in the show notes.
[00:04:16] Speaker A: Okay, so 10 episode arc we're smack in the middle. Crazy ideas. I'm just trying to get you to think differently about our industry, to help you reinvent, reinvigorate, so we can continue to evolve this industry. Today. I want to talk about the elephant in the room, which is alcohol. We know that the generations that are coming are drinking at a much lower rate than the previous generation. Certainly millennials, Gen X, the boomers, they drink more than Gen Z and below. So what are we going to do about it? Because most restauran rely on drink sales to help them balance out their profitability. So what do we do when people are no longer drinking at the same level? Yes, we can do zero proof. Yes, we can make mocktails. But are people willing to pay a premium in the same way that they're willing to pay a premium for alcohol? Meaning they'll pay a premium because they get a buzz. They get an effect from It. So what happens when they're just drinking something that tastes good but doesn't necessarily give them an effect? It does not give them that fuzziness that alcohol gives them? What do we do? Because if we do not have an answer for this, I promise you the profitability of our restaurants are gonna topple when we suddenly have to be running our food cost at 18 to 20% to help balance out all of the other costs we have in our restaurant. And make no mistake, that is where you're gonna have to put your food cost.
What do we do? If you have never thought about this, this is your invitation. I am inviting you to really start to wrap your heads.
Statistics are coming out that, for example, Gen Z is drinking on average 25% less than millennials and Gen X. That represents a huge loss in revenue, therefore also a huge loss in profitability. So what do we do about it? And I'm not gonna pretend to even know the answers. My idea, my crazy idea, right? The crazy idea here is what if we just got rid of it altogether? What if we say that it's never gonna be a part of our restaurants in 30 years, it's not gon meaningful part of it. If I said, what if you had to do it, What? What would you do? If I said you had to get rid of alcohol, what would you do? My crazy idea is not to get rid of alcohol. My crazy idea is to invite you to think about if we went through another prohibition, if I said you couldn't serve alcohol. Because what's going to happen is that there's going to be a meaningful amount of people that just aren't going to do it, then what do you do to your food?
[00:06:45] Speaker B: Right?
[00:06:46] Speaker A: So Seth Godin always asks this question.
Seth Godin always says, what would you have to do if I forced you to double your prices tomorrow?
What would you have to do? In the way that you market your restaurant, the way that you talk about your product, what will you have to do so that in the eyes of the consumer, it was worth twice what they paid yesterday?
That is a powerful question to ask yourself.
I've talked a lot about the luxury mindset versus the commodity mindset, right? Commodities are base goods. Means all things being equal, the consumer will base their decision on one of three criteria. Familiarity, convenience, or price. If they can get what you have elsewhere and it's cheaper, they'll go elsewhere. If they can get what you have elsewhere and it's closer, it's more convenient, they will go there. If they can get what you have but from the more famous place, the more familiar place, they will go there.
So we can't compete on those three. We can't compete compete as a commodity. So we have to think like a luxury product, right? Eleven Madison park is one of the best restaurants in the world. They are now completely vegan. And they are not cheaper because the product is cheaper, those vegetables are cheaper, but they are still charging a premium. They believe that a vegan diet, that a vegan experience is worth top dollar price. And guess what? The hunt. Thousands and thousands of thousands of people every single year agree with them.
[00:08:14] Speaker B: Now you don't have to agree with.
[00:08:15] Speaker A: Them, but plenty of people do.
[00:08:17] Speaker B: And it's the same thing in your restaurant.
[00:08:19] Speaker A: There are plenty of people who will believe what you believe if you tell.
[00:08:22] Speaker B: Them you believe it.
[00:08:24] Speaker A: I think when the next generation comes up and they are drinking 25 to 50% less, it's going to mean big trouble for our industry. So my question for you is what do you do about it?
The crazy idea is to get you to think about it and say what would you have to do?
But do not wait till the last minute till you are forced to come to this decision.
So having a zero proof cocktail program, fine. But I think it goes way beyond that. I think it goes way beyond just trying to replace boozy stuff with non boozy stuff. I think it's about rethinking beverage. I think it's about rethinking the way you cost your food, the way we talk about our product.
That's my challenge to you. That's my crazy idea. What would you do if. Because I don't think it's an if. I think it's a win again. One final reminder, the P3 profitability summit is coming up in October. There are less than 30 tickets available at the time of this recording and maybe less now. If you want to be there, I want you there. You're going to find the link in the show notes. Go learn more about the program, learn about that summit three day event and get your tickets. I look forward to seeing you guys in Texas and I will see you next time for more crazy ideas.
