In recent years the restaurant industry has struggled in the recession, but at WSD we're seeing signs of life. So far 2012 has been good for full-service restaurants, with same-store sales up +3.7% in January and +2.7% in February. Fine dining restaurants performed much better than casual-dining, growing +5.6% versus +2.3%, according to National Restaurant News. With this knowledge in mind, WSD spoke with Maggiano's director of marketing Michael Breed to gain some insight on what the national chain is doing to drive its wine and spirits sales.
One of the key platforms for Maggiano's is abundance of value in everything they serve. "Value is important to every guest," said Michael. "We kind of look at value across the spectrum and try to deliver, whether you're a price sensitive guest or if you're looking for a value from something else."
WINE STRATEGY. As an Italian restaurant chain they have always been a "wine centric culture," said Michael, and it's a much bigger part of the business than beer and spirits. Sticking to their motto, Maggiano's attempts to offer value at every price point on the wine list and not just by offering less expensive wines. For example, the chain offers Silver Oak at under $100 a bottle. Allegrini Palazzo De La Torre is offered at the highest price point by the glass, but "it's a great value within the price point," said Michael.
The chain is picking up on the sweet wine trend as well. They added Seven Daughters moscato to the wine list in November and "that's been one of our fastest growing new additions," he said. Though he added that pinot grigio, chardonnay, chianti and cabernet are still their best selling varietals because its what people are comfortable with.
As the economy slowly improves Michael said they are, "seeing guests treat themselves a little bit more and trade up within the list." He explained that often times in any given varietal the lower price wine is not the best selling, but that the next tier up does the best.
COCKTAIL STRATEGY. Since Maggiano's is not as much of a cocktail destination as it is wine, the strategy they employ is to have fewer cocktails and spirits, "but really go for quality." The cocktails they feature usually have premium spirits and fresh juices in them.
Although skinny cocktails have been on fire in the industry, Michael said they took them off the new beverage menu in November. Their reasoning behind the change is this: "The skinny platform was a disconnect for us" because "one of our key points of definition of the brand is abundance and that's often times what people are seeking when they come to Maggiano's."
DRIVING SALES. For those guests who are looking for adult beverages at lower price points, Maggiano's added a new Happy Hour menu they call "$3 to $6 from 3 p.m. to 6 p.m." in November. They offer $6 cocktails, $5 wines and $3 draft beer. Michael said they have experienced success at getting people in during pre-peak hours, and "taking advantage to treat themselves, but still order a glass of wine, still order a cocktail etc within the Happy Hour framework."
FT: DIAGEO PRESSURING THE BECKMANNS FOR AN ANSWER
The Financial Times ran an interesting piece yesterday regarding the behind-the-scenes talks between Diageo and the Beckmann family over Jose Cuervo. Recall that Diageo's agreement with the Beckmanns to distribute Cuervo on a global basis is up in a little over a year (June 2013). Execs have repeatedly said they would like to own the brand outright but it of course depends on the Beckmann family - namely patriarch Juan. And it seems as though no one quite knows what to expect. Nomura analyst Ian Shackleton said he would "be surprised if the business is sold while [family head Juan] Beckmann is alive and in control."
Meanwhile, there is little indication from Diageo on how the talks are fairing. During Diageo's H1 earnings call with analysts, newly appointed coo Ivan Menezes said discussions "are ongoing.. As you've heard from Paul before, our intention is to secure a long term participation in the tequila category globally and in the United States."
Chief Paul Walsh also recently said this: "The distribution agreement will have to be renewed. The terms and conditions of the current agreement would need some revision from our perspective. I don't think we make enough money out of the brand. We are offering the brand incredible global distribution."
The article claims Diageo is "demanding a resolution to year-long talks over an acquisition within the next few months." If they fail to reach a deal then Diageo will be "on the hunt for another tequila brand, potentially triggering a fresh round of consolidation in the drinks sector."
A number of analysts speculate that if Cuervo is out of the picture then Diageo may set its sights on Beam Inc., although Beam has said repeatedly is will remain an independent spirits company. It is valued somewhere between $9-$10 billion. A buy-out would give Diageo Sauza Tequila, Maker's Mark and Jim Beam. Of course, Beam has been the subject of takeover speculation since announcing plans to break away from former parent company Fortune Brands, so this new round of speculation is really nothing new. The reality is that Beam has posted impressive growth since splitting off, and has been rather acquisitive with Skinnygirl and Cooley Irish whiskey. Also, Diageo may have to choose between ending its stake in Moet Hennessy and selling off Courvoisier to appease regulators.
Still, Bernstein analyst Trevor Stirling told FT "probably it's a question of when, not if, the company [Beam] becomes subject of a bid." Pernod Ricard has been named a possible contender, although not in the near term as they are currently focused on paying down debt.
In all, it was a speculative piece so take it with a grain of salt. We'll keep our ear to the ground on any Cuervo updates.
SALES AT FULL-SERVICE RESTAURANTS RISING. Sales at full-service restaurants rose +8.7% in the 12-months through January year-over-year, reports the New York Times based on data from the Census Bureau. "That was the fastest pace of growth since the late 1990s, when the economy was booming," said the article. Americans reportedly spent about $220 billion a year at full-service restaurants, and $211 billion at the limited-service places. They spend about $21 billion at bars and nightclubs, but sales "are now rising slower than at either type of restaurant." However, a number of industry execs have said the on-premise is making a comeback, so that may soon change.
STAGLIN FAMILY VINEYARD has promoted Shannon Staglin from general manager to president. Shari Staglin leads the company as ceo. The 64 acre estate is based in Rutherford, California and has been family owned and operated since it was launched in 1985. Its varietal production includes Cabernet Sauvignon, Chardonnay, and limited quantities of Sangiovese, Cabernet Franc, and Petit Verdot.
Until tomorrow, Megan
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