Alcohol sales are like a secret window into how well restaurants and bars are doing financially.
By Brooklyn Rodgers | April 11, 2024 | 10:52 am | Photography by Brooklyn Rodgers
Alcohol sales are a less well-known indicator of a restaurant or bar’s profitability. As such, they provide much insight into the financial performance of a specific concept when evaluated over time.
It has long been established that margins on food sales are breakeven, making it tough to turn a profit on food sales alone, even before the recent economic instability restauranteurs have grappled with including unstable food costs, general greedflation, and a restaurant labor shortage complimented by rising wage rates. In contrast to the financial difficulties posed by margins on food sales, margins on liquor sales have fewer confounding factors.
As a rule of thumb, from purchase by a restaurant from the supplier, to consumption by the consumer, alcohol typically undergoes a 3X markup. The profit extracted from this hefty markup is typically preserved by the relative stability of liquor prices over time, and overall less direct overhead.
The TABS Report, put together using data that restaurant, bar, and venue operators are required to report to the Texas Alcoholic Beverage Commission, is compiled monthly, and can be accessed online at https://www.alcoholsales.com/.
Most of the fun features (for data nerds) are behind a paywall, including the ability to drill into a specific restaurant’s numbers monthly and see their specific breakdown of liquor, beer, and wine.
More casual perusers of the public financial data of hospitality concepts (if there are any), can sign up for the TABS Report email list, where you will be notified, usually the first week of each month, of the release of the previous month’s Top 25 Bars & Restaurants in *your chosen city* by Alcohol Sales.
In the free version of the TABS Report, the site does not archive the city-by-city Top 25 data for later retrieval, so if you are interested in viewing performance in past months, to say, write an article for your food blog, you would need to be proactive enough to archive the data in real-time in your archives.
At the time of publication, interested parties in Dallas, TX had access to January and February numbers for these Top 25 stars. So, what do the numbers tell us?
At first glance, February sales are down marginally compared to January by about 1%. On the whole, liquor sales continue to trend upward in Dallas. This negative trend, even if slight, is surprising when considering the holidays and observances that occur in January and February. “Dry January” is popular amongst the health-conscious, where drinkers refrain from consumption for the entire calendar month. Mocktails have also become increasingly popular amongst Dallas drinkers, with many restaurants featuring a short list of booze-less “cocktail-inspired” offerings.
In contrast, February features Valentine’s Day and Mardi Gras, both social holidays, although Mardi Gras is notably less popular in Dallas. Perhaps we will see an uptick in March liquor sales with warmer weather and the celebration of one of the largest drinking celebrations of the year, St. Patrick’s Day.
A look at historic 2023 liquor sales data shows that restaurants tend to make the list only after pushing 400k in total receipts. So, if your favorite bar or restaurant is missing from this list, they are likely selling under $400,000 in total alcohol receipts, and realistically much less than that.
As advertised, this scoop of data contains the most profitable concepts in Dallas when it comes to liquor sales, when in reality not many concepts are pushing 100k a month in total receipts. The 400k threshold is still a behemoth for many operators, combined with competing against some of the largest venues in Dallas, who by volume, are bound to push out mid-size and smaller competitors from this list. According to January and February data, top sellers include the American Airlines Center (Levy Restaurants), the Omni Dallas Convention Center, and the Hilton Anatole (SALC, Inc).
As a self-perpetuated wiseman and casual stock trader once told me, people drink in good times, and they drink in bad times, meaning alcohol will never be a bad investment. Restaurant profitability certainly hinges on people’s unwavering love for consuming alcohol. If nothing else good can be said about alcohol, alcohol is certainly a foundational pillar in the success of restaurants, bars, and venues alike in these trying times.
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