NEW YORK – Cocktails might be trendy, but water is increasingly the beverage of choice for consumers dining out.
A recent survey by restaurant research firm NPD group showed that tap water was the fastest growing beverage at casual dining chains in 2010," said Warren Solochek, analyst with NPD Group. "The challenge is how do you get people to buy more than just an entree."
The average check value was up 1.7% in the fourth quarter of 2010, but costs were up a lot more than that.
"Margins are going to be compressed because they don't have the pricing elasticity to manage their checks in a way that would fully offset the rising costs," Solochek said. "That will be the key issue for 2011, particularly in light of the fact that [the price of gasoline] is rising so much."
To help increase check values, casual dining restaurants are taking advantage of happy hour, offering more late-night menu items and marketing drinks specials, given that alcohol offers such a high profit margin.
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