Happy hour is getting happier, and that’s making restaurants sadder.
As the recession drags on, drinkers such as Luis Romero of Anaheim, Calif., are gravitating to happy hour — that late-afternoon period when bars and restaurants sell discounted drinks and food to attract customers during what otherwise would be a slow time.
“You start watching your pennies a bit more,” Romero said as he sipped a $3.75 pint of Honey Blond Ale one recent afternoon in the Yard House restaurant in Long Beach. Just a few hours later, the same beer would sell for $6.
Typically, alcoholic beverages are recession-resistant, if not immune to economic downturns. This recession, however, is hurting alcohol sales more than previous slumps have.
People are trading down from premium vodka brands to whatever is good enough to still make the martini work. Others are giving up Napa Valley Cabernet Sauvignons for budget reds. Some are ordering a soft drink or just consuming water when they dine out.
“This is far worse than anything we have seen,” said Eric Schmidt, an analyst at research company Adams Beverage Group.
The trend started to appear as far back as summer, although no monthly index exists for national restaurant and bar sales of alcoholic beverages.
In July, trade publication Wine & Spirits Daily reported that more than 40 percent of bar managers, bar owners and bartenders surveyed said they had seen a decrease in consumer traffic, while 25 percent noted a decrease in the number of drinks ordered and 22 percent said that customers were ordering less expensive drinks.
The cutback in beverage revenue comes as customers eat at home more often, putting restaurants in one of the most severe slumps the industry has faced in decades. Same-store sales growth for casual dining establishments — the Chili’s, Macaroni Grill and Applebee’s restaurants of the world — fell nearly 5 percent in the third quarter, said David Henkes, the alcoholic beverage analyst at restaurant consulting company Technomic Inc.
And the tab for drinks also is taking a new twist. Yard House, which boasts 250 beer choices at its Long Beach location, is selling happy-hour domestic beers for $3.50, imports and crafts for $3.75, well drinks for $4.25 and the house martini for $5.50. Next door, Tequila Jack’s Beach House Cantina advertised domestic brews also for $3.50, imports at $3.95 and well drinks for $3.95.
They are battling for such customers as Paul Yamada, who said he called Yard House and another bar earlier in the day inquiring when happy hour started and then alerting “friends who should show up soon.” His group picked Yard House because its specials started at 3 p.m., an hour earlier than the other choices.
Customers such as Yamada and Romero have kept the volume of beer flowing at Yard House and other bars and restaurants, but it’s slicing into revenue.
“We don’t see a change in what people are drinking as much as seeing a change in the time they are drinking,” said Kip Snider, beverage director for the Yard House chain of restaurants.
