Alcohol is driving business and interest in NextGen breakfast.
While the rise of NextGen breakfast and brunch brands has been fueled by a number of factors, such as elevated menus and vibrant spaces, nothing brings a fresh, celebratory twist to the morning daypart quite like the beverage menu.
Unlike many legacy breakfast players, these up-and-comers are embracing alcoholic drinks that include staples like mimosas and Bloody Marys, as well as less expected libations. The creativity behind these beverages was once strictly the realm of evening establishments. And while some flash-in-the-pan trends quickly fizzle, boozy breakfast/brunch is carving a permanent spot in the full-service space.
“Is this a trend with legs for the future? Absolutely,” says Robin Gagnon, CEO of We Sell Restaurants, a broker franchise specializing in restaurant sales. “If restaurants see this pay off financially, expect to see more than coffee or tea on early morning menus.”
In terms of dollars and cents, serving drinks is a no-brainer. As Gagnon points out, average profit margins on alcoholic beverages can reach as high as 70 percent; food, on the other hand, hovers closer to 25 percent.
“Alcohol sales in restaurants are commonplace for full-service dining and sports bars and clubs. That’s all changing, however, as alcohol emerges on menus starting with the breakfast daypart and extending into brunch and lunch,” Gagnon adds.
From a cost perspective, the morning daypart has historically been a less expensive operation. The menus at chains like IHOP may be extensive, but throughput is fast and simple. Ingredients are typically less expensive, too. NextGen concepts may serve slightly more labor-intensive items and source pricier ingredients, but they can also charge a premium.
Furthermore, these restaurants edge out their legacy counterparts in shorter hours of operation (often only one shift per day) that require fewer employees, but still manage to pull comparable unit volumes. (For example, First Watch and Denny’s were neck and neck in 2021, with both posting $1.7 million in AUVs; IHOP was just slightly higher at $1.9 million.)
Texas-based Toasted Yolk had beer and wine on the menu when its first store opened in 2010, but it took another five years before its offerings expanded to spirits. As owner and cofounder Chris Milton explains, liquor licenses were hefty in the Lone Star State, and as a new entrant in the breakfast space, The Toasted Yolk didn’t realize what a draw those drinks could be.
“A wine-based Bloody Mary just doesn’t get the job done. So we ended up making the change,” Milton says. Now, Bloody Mary sales are nearly as high as mimosa sales.
Even though it took a few years for The Toasted Yolk to expand its beverage menu, Milton says the bar was always a central focus.
“When we started, everybody was kind of a rooster-on-the-wall, country breakfast place, and we wanted to be something different,” he says. “That bar just makes up such a neat part of our atmosphere; it’s in the center of our restaurants. We start with the bar and then build out from there.”
Over the past decade or so, Milton has observed a shift in consumer habits, starting with his wife and her friends, who now prefer weekend brunch for their social gatherings rather than dinner. Breakfast and brunch have become more of a destination, he says.
Paul Macaluso, CEO of Another Broken Egg, has witnessed a similar evolution. In 2016, alcohol sales comprised just 6 percent of sales; today it’s more than double, at 15 percent.
Like The Toasted Yolk, Another Broken Egg has focused on the bar element since day one—something Macaluso attributes to the brand’s New Orleans roots. (Although the chain is now headquartered in Florida, it started in southern Louisiana.)
“We have a saying at Another Broken Egg that brunch without alcohol is just a sad breakfast,” Macaluso says. “Brunch is about amazing food and ‘spirited’ connections, which includes both the relationships you foster and the beverages you enjoy together.”
As interest in the more “spirited” side of things has grown, Another Broken Egg has expanded its beverage list in kind, with seasonally driven, limited-time options. It also suggests drink pairings for LTO dishes, such as the Tito’s & Watermelon Red Bull cocktail alongside the Brunch Short Ribs, which feature a watermelon reduction sauce.
The Toasted Yolk also rolls out specials and pairings. Milton estimates that mimosa and Bloody Mary orders account for 65 percent of all alcohol sales, but seasonal LTOs bring a fresh twist. In mid-November, the brand introduced Jack’s Spiked Hot Chocolate, which features Jack Daniels whiskey and is topped with whipped cream and Oreo crumbles, making it a natural accompaniment for the new Double Stuffed Oreo Waffle.
Snooze an a.m. Eatery was arguably ahead of the curve on the breakfast beverage front. Since opening in 2006, the Denver-based brand has had a full liquor license and served signature libations.
“We try to put a creative twist on familiar cocktails, bringing something different to the category,” says Becky Fairchild, senior brand manager for Snooze. “Our Bloody Marys and mimosas are a good example; we have the classics but also provide a different experience through unique ingredients.”
The restaurant uses a proprietary Bloody Mary mix, made by partner CPG brand The Real Dill, and infuses its vodka with jalapeño and habanero. Other menu strongholds include the Blood Orange Mimosa and the Snoozeberry Cereal Milk Martini (vodka, house-made strawberry coulis, cane syrup, oat milk, and a fresh strawberry).
Starting in a state like Colorado, where alcohol regulations aren’t especially restrictive for restaurants, Snooze did face new hurdles when it expanded into certain markets. Fairchild offers North Carolina as an example; its restaurants can only order alcohol through state-owned liquor stores, which made it difficult for Snooze to source specialty spirits—especially at commercial volumes.
“The big challenge is that every state is different. We have to figure out what is needed in each state and county,” Fairchild says. “Sometimes we need a hearing to present our case for approval, sometimes we need certain inspections to happen before we can receive our license, and oftentimes, construction delays have a huge impact on getting it on time.”
Despite these complications, Snooze has managed to push its footprint to more than 50 units, including a trio of locations in North Carolina.
For all the potential obstacles and extra costs that come with a boozy brunch, a growing legion of brands clearly finds the effort worthwhile. Beyond boosting revenues, these restaurants are also growing their foot traffic by catering to groups that might otherwise be overlooked.
One of the top performers in The Toasted Yolk system is the Beaumont, Texas, store. Its success is driven in no small part by the oil and gas industry nearby, whose workers will visit for a meal and drink after a night shift at the refinery.
In other locations, The Toasted Yolk offers what Milton describes as a “reverse happy hour.” Called Scrub Love, this discounted timeframe caters to medical professionals who work nights.
“When they get off of work and need to unwind, there’s nowhere to go,” Milton says. “We’re located by a lot of hospitals. We’ll open up at 7 o’clock in the morning and have five or six doctors or nurses coming in, and that’s their happy hour time. So we give them half off their drinks, and it’s turned out to be a pretty neat partnership.”