The alcohol crisis for restaurants

People are apparently drinking quite a bit less, and this is a big problem for the bottom line at restaurants:

Preparing food requires perishable ingredients and a large amount of labor, while alcohol is shelf stable and, except at the most dizzying heights of mixology, requires less work than cooking. As independent restaurants struggle with higher costs of all kinds — rent, labor, ingredients — the hollowing out of the most profitable part of the menu couldn’t come at a worse time.

According to David Henkes, a senior principal at the food service research firm Technomic, alcohol sales are slumping in every category of the restaurant industry, from fine dining to casual establishments, with 31 percent of operators reporting “severe declines” in alcohol sales in 2025.

One possible solution is the proliferation of fancy non-alcoholic drinks, aka mocktails. The problem here is that the assumption that what makes a cocktail expensive is the alcohol is often wrong:

Marco Canora, the chef and owner of Hearth restaurant in New York City, said his 2025 alcohol sales were down about 7 percent compared with the year before. His nonalcoholic cocktails require the same amount of labor, but consumers won’t pay the same price.

“Even really nice liquor is relatively cheap compared to juicing and good teas,” Mr. Canora said. “Consumers’ brains are like, ‘You’re going to charge me $18 and I’m not even getting alcohol?’ Yeah, because you have no clue what things cost, and you think alcohol should cost more than nonalcohol. It’s actually the opposite.”

Another assumption is that drinking is down because of health concerns, given recent studies suggesting that even moderate to light drinking carries non-trivial health risks, but perhaps a more plausible explanation is simple demographics: the population is getting older, and people tend to age out of heavy drinking after their 20s and 30s. Plus apparently the GLP-1 drugs suppress the desire to drink, and 7% [!] of all adults are currently taking them.

This statistic from the article’s lede struck me as facially implausible:

Damon Wise opened his barbecue restaurant, Pineapple Express, in Montclair, N.J., with a traditional business plan. Forty percent of the revenue would come from food sales, and 60 percent would come from alcohol. A veteran of the New York City restaurant world who had operated restaurants in multiple states, he knew this was the magic ratio.

But over the past two years, that ratio started to break down. First, the food and alcohol split became 50-50; then revenue slid further, with 70 percent coming from food and only 30 percent from alcohol. In January, Mr. Wise announced Pineapple Express was closing.

Sixty percent of traditional restaurant revenue comes from alcohol sales? I guess I could believe this figure in regard to profit, but have people traditionally averaged six dollars of spending on alcoholic drinks for every four dollars they spend on food?

Anyway, the reasons for long-term changes in drinking patterns are no doubt complexx:

Restaurant operators seem generally befuddled by what Gen Z is doing. It’s not drinking at their establishments. Is it smoking cannabis, legal for recreational use in 24 states, or experimenting with illegal but increasingly trendy psychedelics? Hanging out in their homes alone with their phones?

I plan to do my part for the struggling alcohol industry when Trump dies, by staying drunk for at least three days. After that I’ll probably drink a lot less than I’m drinking now, however. I’m extremely eager to run this particular experiment, as are I’m sure a few tens of millions of other Americans, not to mention a couple of billion other people around the world.