Constellation Brands Wants More Beer, Less Wine in 2019

By. Demitrios Kalogeropoulos

Constellation Brands (NYSE:STZ) has enjoyed a strong track record for buying premium alcoholic beverage franchises and boosting their value. The most consequential of these acquisitions was the 2012 purchase of imported Mexican beers including Corona and Modelo that sparked a five-year period of sharp sales and profit growth.

The company is taking a different approach to allocating capital as it enters 2019, choosing instead to pare back its portfolio by removing many of its wine and spirit brands. In a conference call with analysts, CEO Bill Newlands and his executive team explained why this sale fits with their broader strategic plans, and how it could lay the groundwork for improved results ahead. Let's look at some investor highlights from that presentation.

IMAGE SOURCE: GETTY IMAGES.

Fixing the wine and spirits segment

Our remaining wine and spirits business will primarily consist of wines at the greater than $11 price point and will include fast-growing, high-margin power brands like Kim Crawford, the number one sauvignon blanc in the U.S.; Meiomi, the number one U.S. pinot noir; and SVEDKA Vodka, the number one imported vodka in the U.S. -- Newlands

Far from exiting the wine and spirits business entirely, Constellation Brands' $1.7 billion brand sale represents a shoring up of this segment, which has struggled to grow for over a year. In the past few quarters, executives blamed brands at lower-end price points for pressuring results, and those are the franchises that management chose to sell to E. & J. Gallo Winery.

The remaining portfolio will be smaller, executives said, but faster growing and more profitable. Specifically, Constellation Brands is predicting consistent market share gains and operating margin of around 30% after the sale closes, compared to the 26% level it achieved over the last year.

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Restaurant Menu Trends: What to Expect to See on More Menus in 2019

Holly Everett

avocado, the industry has seen palates evolve year-to-year, as guests welcome emerging food trends to their plates. Diners have recently become more daring, seeking out culinary experiences that are guaranteed to leave a lasting impression.

A survey from Global Data revealed that Millennials are more likely to try novel flavors, with 79 percent stating that they “enjoy experimenting with products from different cultures or countries.” This willingness to try new foods has led restaurants to make a choice: adapt to adventurous diners or keep it classic?

Whether it’s staying active on social media, reading restaurant management blogs, or staying connected with other owners and chefs, trendwatching is a key to keeping customers interested. Restaurateurs that are in-tune with the trends around the industry are likely to attract customers that are on the hunt for the next best thing in the culinary world.

Upserve surveyed 2018 menu and sales data from nearly 9,000 restaurants to dig into what food trends drove the most orders, and which are being left behind.

The Hottest 2019 Restaurant Menu Trends

Many emerging food trends popped up across the country in 2018, but few made restaurant customers curious more than these unique eats. If these ingredients aren’t already on your menu, you might want to think about updating your current menu to keep your customers coming back.

1. CBD (Cannabidiol) — up 99%!

It was only a matter of time before cannabidiol—or CBD—made its way into the restaurant industry. The non-psychoactive derivative from the cannabis plant has helped consumers looking for relief from inflammation, pain, anxiety, insomnia, seizures, spasms, and other conditions without the negative side effects of some pharmaceutical drugs. 

According to the National Restaurant Association’s (NRA) What’s Hot Culinary Survey, a barometer of U.S. food and beverage trends, 650 professional chefs—all members of the American Culinary Federation—said infusing food and drink with cannabis and CBD could create unique cuisine opportunities and potential new markets for experiential dining occasions. Of the survey’s respondents, 77 percent identified cannabis/CBD-infused drinks as the number one trend in the restaurant industry right now, and 76 percent tapped cannabis/CBD-infused food as the second most popular trend.

Data from Upserve customers revealed a 99 percent increase in CBD menu items in 2018, setting up 2019 as the year of CBD. From baked goods to CBD-infused beverages, restaurants across the country are responding to a consumer demand to chill out. 

“There has been growing popularity and support around CBD, and if it makes people happier and less stressed, then why not give the public what they want?” says Nick Duckworth, owner of cafe Banter NYC. They currently only sell Dirty Lemon CBD, a packaged, CBD-infused drink, but will be expanding their CBD offerings in 2019, allowing customers “to add CBD drops to most beverages.” 

At River and Woods in Boulder, CO, CBD has become a menu staple that’s used in everything from glasses of water to garnish for oysters. “It is mainly used in our beverage program for cocktails, mocktails, beer, and wine,” says Ian Mitchell, beverage manager at River and Woods. “We serve Kannaway Pure Gold, Full Spectrum CBD oil. While a single portion is $5 per 5mg, our wellness cocktail offers a discounted price of only $3 to add the small 5mg optional garnish to the ‘Be Well.’ With the benefits of ginger, turmeric, apple cider, and carrot, the addition of CBD further promotes anti-inflammatory and many other health-based properties.”

In Colorado, CBD is not only accepted—it’s everywhere. “For us, it’s a way to expand the experience of dining, and to do it in a way that the community could appreciate,” Mitchell says. “CBD was a great addition to our menu because of its medicinal benefits, the simplicity and elegance of it as a garnish, and its trendy nature. The oil is tasteless and colorless, but creates a great circular shape on cocktails.”

On any given night at River and Woods, up to 20 orders worth of CBD are sold throughout the restaurant. But it wasn’t the trendiness that made them make the decision to offer CBD to customers, says Mitchell, but the value for customers. “A customer had asked for an explanation of CBD, and then requested that she get some in her water glass. This great moment encapsulates everything we’re striving to do.”

Best Practices for Serving CBD

Before you consider adding CBD to your menu, it’s important to consider the implications of infusing your cocktails and lattes with the oil’s soothing benefits. The science behind combining CBD with alcohol is mixed, which is why some restaurants are erring on the side of caution when it comes to CBD dosing on their menus. 

“On CBD, you’re very chill, very lighthearted, mellow. The alcohol will make that more intense,” James Giordano, professor of neurology and biochemistry at Georgetown University Medical Center, told Vice. “If you’re a happy drunk, then CBD could make you a happier drunk,” Giordano says. “If you’re an angry or violent drunk, the CBD may certainly disinhibit some of that.”

Due to the lack of research around dosing CBD, it is recommended that owners and managers start with small doses to be safe, or limit doses per customer. 

“It’s important to understand that CBD is biphasic in its nature, so in small doses it’s gonna make you feel more alert and activated, and then in larger doses, it’s going to have more of a calming, sedating effect,” Emily Berg, an Herbal Program Manager with an encyclopedic knowledge of all things CBD, told Gothamist. “With that being said, a large dose may not be suitable for every application of CBD, and that’s why we kind of suggest microdosing. We also suggest that because your absorption rate depends on your metabolic rate.” 

At River and Woods, there are no formal limits for customers ordering CBD cocktails or food.

“There are no rules governing limits on CBD infusions,” says Mitchell. “Because we use a product that contains 0% THC—and it is illegal to serve THC in any way under CO liquor license laws—there is no psychotropic concern any more than there would be if we were adding any herbal extract like aloe or ginger root. We also do 5mg doses, and safe daily doses are 35mg and up, so we haven’t run into any issues with anyone even approaching a level that might be questionable.”

Refreshing your menu in 2019? Our Smart Menu Builder can help.

2. Fermented Foods — up 149%

The wellness trend continues: a recent obsession with gut health has consumers turning to naturally preserved foods. This means that fermentation has swept the restaurant industry, with a staggering 149 percent increase on Upserve customer menus, making it the biggest trend in 2018. 

One of the most popular items to take the food industry by storm? Kombucha. This fermented, sweetened, slightly effervescent, functional tea beverage has popped up everywhere from restaurants to mass retailers.

Ben Aalvik is the co-owner of Fully Rooted, a raw cold-pressed juice and kombucha company based in Providence, Rhode Island. Ben has been brewing his own kombucha since 2010, but didn’t introduce it to his pressed juice business until 2017. “We started selling cold-pressed juices in 2013. When a lot of markets started carrying kombucha in 2016, we knew it was a good time to start,” he says. “Kombucha is a very difficult product to keep consistent, so we added a brewery room to our space to control the product. There are a lot of things that can throw it off or change characteristics of the beverage.”

Fully Rooted has a line of four flavors of kombucha—Citrus Hibiscus, Gingerishi, Hopped, and Lavender—and use a combination of black, green, and herbal teas in their product. “We experiment with both types of teas, and have some herbal-based, caffeine-free products using Honeybush Tea from South Africa with nettle and lemon balm,” Aalvik explains. He and the Fully Rooted team are well aware that consumers are interested in functional beverages like kombucha, and are working on a new line of herbalist-formulated kombucha that has added benefits. “It requires a lot of education,” he says. “There are still a lot of people who have no idea what it is, or how to say it.”

Photo: Fully Rooted on Instagram

Despite the lack of knowledge from consumers, kombucha has managed to grow in popularity. Fully Rooted started wholesaling their products in September 2018, selling to local restaurants, cafes, and small businesses. “We’re being careful to not run out of product, but we’re keeping up with the demand,” he says. “The restaurants that are carrying our kombucha are growing sales every week.”

Aalvik cites the biggest challenge with the kombucha business is a price point. “We’re at $7 per bottle, which is working. When grocery stores are selling it for $4 per bottle, businesses are hesitant, but ends up selling well,” he says. “We have an advantage over the bigger brands—it’s lighter and fresher. When products come to Rhode Island from California, it ferments more in the bottles, resulting in a more sour flavor.”

As for the next thing in fermentation, Aalvik believes that water kefir could be big. “There are a lot of different fermented beverages around the world, but I think water kefir is the next one that could get more popular. It offers different strains of probiotics that are more helpful for other parts of the body,” he explains. “And it’s quick to produce—only one to two days, instead of seven to 10 for kombucha.”

What does this fermentation trend mean for restaurants in 2019? Restaurants should expect more customers to be seeking the probiotic-filled foods all year long. Fermentation carries a wide range of health-related benefits, including necessary enzymes, omega-3 fatty acids, and vitamin B. With a variety of categories for fermentation to live on restaurant menus—including vegetables, beverages, and dairy products—chefs can have fun getting a little funky in the kitchen with fermentation. 

Looking for ideas? Try adding kimchi to a dish or kombucha to your cocktail menu. Your most adventurous customers, and their digestive systems, will thank you.Continue Reading

Restaurant Solutions: How to Track Expenses the Smart Way

By Derek Miller

When it comes to running your restaurant, your expenses are probably one of your biggest headaches. If they get out of control, you’re in the red. Yet, it can be challenging to stay on top of them with so many other tasks to take care of. Here’s how to ensure that you manage and track your expenses like a boss.

1. Use Restaurant-Specific Software

It’s a lot more challenging to stay on top of restaurant expenses if you’re using a spreadsheet to log them. Accounting software is really affordable these days, and some are geared specifically toward restaurants, and include features like inventory management and purchase order management.

If you use inventory software (in addition to or as part of your accounting software), your expenses are recorded as soon as you place an order for more artichokes. And your point-of-sale system can link up to your inventory and ordering systems so that, when someone orders the second-to-last ribeye, you automatically put in an order for more.

2. Assign Someone to the Job

It might be your job as restaurant owner or manager to oversee expenses, but if anyone else is involved with inventory management, get a plan for who will be responsible for logging the expenses in your accounting software.

If your chef does the ordering but you handle the expense management, make sure he gives you a receipt or invoice for everything that he orders. Your best bet is to scan any outstanding invoices into your accounting system to pay rather than letting them pile up on your desk and risk them getting lost in the mess. Teach the process for getting expenses logged in the training process to ensure that new hires know how to handle them.

3. When You Charge It, Log It

Using a business credit card can help you keep cash flowing in your business, but use it wisely. First, pay off the balance each month, otherwise you end up spending far more than you budgeted for anything you charge, thanks to interest rates.

Second, record the expense as soon as you buy something with your card. You may not remember in a few weeks that the $298.45 charge on your card was for your napkin service, so record and categorize the expense as soon as you charge it. This saves you time later digging back through invoices to match to the expense.

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Restaurant Profitability and Failure Rates: What You Need to Know

By Rory Crawford

Success in the restaurant industry isn’t easy.

The statistics aren’t pretty: 60 perrcent of restaurants don’t make it past their first year and 80 percent go out of business within five years. Despite the hurdles, many restaurant owners and operators believe that as long as they’re making money, they’re doing “good enough.” 

The failure in this approach is that it doesn’t account for a universal truth—costs increase.

According to an IBISWorld report on single location full-service restaurants in the U.S., 67 percent of a restaurant’s costs go directly to wages and purchase expenses. Additionally, the average profit margin for a restaurant, after removing all other costs, is only 6.2 percent. With a profit margin this slim, insolvency is unfortunately never far away.

The biggest risk for the restaurant industry is rising wages and food costs. If you’re not constantly working to improve profitability and grow your revenue, the costs will take over. It’s imperative that you’re consistently and actively reducing costs to maintain your current level of success. How can you do this? Improving efficiencies.

More Restaurant Competition, Lower Menu Prices

Competition in the restaurant industry is at a recent high. Sales at casual, fine-dining and fast-casual restaurants will grow at a slightly faster clip this year, according to a forecast from Technomic. And sales at restaurants was expected to reach $825 billion in 2018, according to the National Restaurant Association, the ninth consecutive year of sales growth for the industry.

It’s classic supply and demand economics—the greater the supply, the lower the prices. Competition amongst restaurants in the United States is both driving down menu prices and making it more difficult to increase them. And it’s not just competition from similar concepts. Limited service restaurants (including quick service and fast casual) are one of the fastest growing segments in the food service industry. 

Restaurant Wages are Rising

Wages represent a significant portion of your operating costs—34.6 percent, according to IBISWorld—and you can expect that number to increase for a few reasons:

Our national unemployment rate is the lowest level in decades.

Minimum wage laws in 18 states and dozens of other cities and counties is increasing payroll costs

Thanks to the high turnover rate and a record low unemployment rate, it’s becoming harder and harder for restaurant owners to keep people without increasing payroll. If your restaurant is in one of the 18 states with new minimum wage laws, you may already be experiencing the crunch. All of these factors create incredible opportunities for those looking to work in the restaurant industry, but it’s not so great for your bottom line.

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How Bars, Pubs and Restaurants Must Adapt to Stay on Trend

By Amy Hodgetts

According to several studies, more  people are electing to stay in rather than going out. For example, where there were 60,800 pubs across the UK in the year 2000, by 2017, this number had dropped to 48,350. With super-cheap alcohol available in shops, to the younger generation preferring teetotal, pubs and restaurants are struggling to entice people to leave their homes for a night out. So, what are these businesses doing in order to stay relevant and innovative enough to encourage customers? 

Value for Money

When it comes down to it, no one like to spend more. So, it’s a difficult pitch for bars and restaurants really — travel somewhere else, pay for a meal you could cook at home for less, then travel home. Pros? You get your food cooked for you, you don’t have to do the washing up, and it’s cooked by a professional. 

Cons? You have to pay for travel, be it in fuel or taxi fare. You have to pay more for the food than buying the ingredients yourself. You can’t always tell what’s in the food, and for now at least, you can’t really tell how healthy the meal is. In a world that is becoming more conscious of health and wellbeing, that last point can be a real put-off for eating out. 

At least restaurants have the pull of professionally-cooked food and new tastes on offer. For bars and pubs, the game is even harder; there aren’t many brands of drink on offer at a pub or bar that you can’t buy more of, cheaper, at a supermarket. Then, you can have them at home, with your friends, away from other people, doing your own thing. Why sit in a pub trying to chat with your friends over the sound of a band you don’t particularly like when you can sit at home, chat to your friends with the same drinks, more money in your pocket, and Spotify on with band you do like? 

Therein lies the problem. People have so much technology at their disposal now that pubs and bars can seem a little dated. Without change and renovation, pubs in particular have felt the sharp sting of decline.Continue Reading

7 Ways to Finance Your Dream Bar

BY. Loren Bornstein

So you want to open a bar…how are you going to pay for it?

In nearly a decade of working behind the stick (behind the bar), I’ve had many a customer talk about how they want to open a bar. A few even spoke to me about helping them open it. But when we start to talk beyond dreams, most don’t want to talk about the reality behind it all. The reality being finances.

For those of you serious about owning a bar, it’s imperative you do the research to understand all the options available to finance your business. I asked Dave Bertelo, who spoke at length about red flags in bar failures, about what it takes to finance your own bar. He and his partner just secured funding for their own bar, thanks in part to a private investor. Dave gave me a list of the various financing methods they considered.

Take notes, my ambitious industry enthusiasts and entrepreneurs!

When it comes to starting any business, you need to be serious about money. Your options are pretty varied, some of which include: the SBA, micro loans, crowd source funding, home equity loans, private investor, self-raised funds, credit cards, and merchant account funding.

I know a lot of these terms are intimidating. Thankfully, Dave gave better explanations of each for you:

SBA (Small Business Administration)

What is it? The Small Business Administration is a great place to start when looking at loans for your bar. The 7(a) Loan Program is SBA’s primary program for helping start-up and existing small businesses, with financing guaranteed for a variety of general business purposes—including your new bar!

Benefits: The money isn’t coming out of your own pocket and there are regulated interest rates, so they can’t just change on you should your financial stability also change. This is a great starting point for many a person intent on opening a bar.

Hazards: A downside is many banks don’t offer these loans. There is a lender match attachment to SBA’s website which helps deal with finding a good lender, but, as Dave and his partner found out, a lot of banks don’t offer these loans unless you are also interested in purchasing the real estate too—which is usually way above the money many potential bar owners can shell out.

Ideal Lendee: You need to have a professional quality business plan and demonstrate financial competency. Talk to a few banks and financial advisors to get a better understanding before starting the loan process.

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Does your business need an alcohol beverage license to serve free drinks in Florida?

Original article by. GrayRobinson PA

Who doesn't enjoy a sipping a glass of wine during a relaxing pedicure--especially if that glass of wine is free?

While there is no such thing as a free lunch, offering a free drink to customers is a practice regularly seen at a variety of businesses, including at beauty salons, gyms, and upscale boutiques. But is this activity legal, or do these businesses need an alcohol beverage license before serving an alcohol beverage to patrons?

Under Florida law, "[i]t is unlawful for any person to sell alcoholic beverages without a license . . ." Fla. Stat. 562.12(1). "Sale" or "sell" is defined as "any transfer of an alcoholic beverage for a consideration, any gift of an alcoholic beverage in connection with, or as a part of, a transfer of property other than an alcoholic beverage for a consideration, or the serving of an alcoholic beverage by a club licensed under the Beverage Law." Fla. Stat. 561.01(9). This law comes with serious consequences, as selling alcoholic beverages without a license in Florida is a seconddegree misdemeanor. See Fla. Stat. 562.12(1).

Florida courts have interpreted the definition of "sale" or "sell" broadly. For example, in the case Dept. of Bus. Reg., Div. of Alcoholic Beverages & Tobacco v. Cost Plus Imports of Tampa Bay, Inc., 513 So. 2d 763, 764 (Fla. 2d DCA 1987), Second District Court of Appeal found that furnishing alcoholic beverages in connection with a limousine rental was a sale within the meaning of Fla. Stat. 561.01(9). This is because the patron paid to rent the limousine, which is consideration (or something of value in exchange) for the alcoholic beverages. Id. According to the Division of Alcoholic Beverages and Tobacco ("DABT"), the entity that regulates Florida alcohol beverage retailers, distributors, and manufacturers: "Any payment for services or products which provides the access to the alcoholic beverage is not considered complimentary (costing nothing) and thus is considered a sale of alcoholic beverages and requires a license."1

So for example, if a patron pays for a pedicure at a salon and is offered a free glass of wine, it is considered a sale and requires licensure. But if the patron does not purchase a pedicure or any other service at the salon, and is still offered a free glass of wine, it is probably not a sale. Alcoholic beverages can be expensive, and if a salon only wants to serve drinks to paying customers, it should obtain an alcohol beverage license.

All businesses that serve alcoholic beverages to patrons should review Florida's alcohol beverage laws and regulations, and consult with a Florida alcohol beverage attorney to help comply with Florida's alcohol beverage laws and regulations.