Hard Day Mule at Z'Tejas.

Hard Day Mule at Z'Tejas.

For the First Time, Distilled Spirits Eclipse Beer at Restaurants

High-quality spirits boost restaurant bottom lines as cost-conscious customers sip better value, flavor, and freshness for their buck.

Distilled spirits are outpacing beer for the first time, thanks to the category’s significant growth and speed of innovation. According to the Distilled Spirits Council of the United States (DISCUS), 16 states (plus Washington D.C.) have passed laws making cocktails to-go permanent, and 14 states are crafting legislation allowing cocktails to-go until 2025.

“The industry has definitely seen a massive boom,” explains Trevin Hutchins, bar director at Aphotic in San Francisco, California. “Beer is typically consumed straight, but spirits, you have a whole secondary industry where bartenders elevate and combine them with [fresh ingredients] consumers already know, creating more excitement behind the spirit.”

And distilled spirits are rocketing toward an even greater market share. A DISCUS report showed 83 percent of respondents wanted to purchase spirits-based RTD cocktails at restaurants and bars, and sales of spirits-based RTDs rose by 42 percent to $1.6 billion in 2021. Full-service restaurants are plucking higher-quality and a greater variety of spirits brands, as well as seeing bottom line expansion, while guests are desiring larger bang-for-the-buck over beer. 

Nicolette Teo, co-founder of California’s L.A. Spirits Awards, says spirits growth in full-service restaurants has been trending for a while now. “It’s another source of revenue that builds brand loyalty,” she explains. “The pandemic definitely accelerated innovation, but it’s using fresher ingredients, experimenting with flavor profiles and herbs, and upping the quality of RTD cocktails. If you're comparing to beer, spirits offer more because they’re not just malt-based and there's many spirits, many ways to experiment, and demand is there.”

Diners are now asking for products that five or 10 years ago you couldn’t give away, including mezcals and additive-free tequilas, says Brian Raab, partner at Scottsdale, Arizona’s Fat Ox, The Mission, and Zinc Bistro, plus tequila life coach/consultant at Tequila Corrido. Guests’ spirit knowledge grew during lockdowns and they’re seeking unique out-of-the-bottle tastes in their dining experience with cocktails, he adds. 

“You're also seeing, ‘My dollar isn't as strong so I'm going to purchase an expensive cocktail, but I'll have one or two versus two or three glasses of wine, or three or four beers,’” Raab explains. “Consumers gravitate toward sipping tequila or a top bourbon or whiskey, and choose their cocktails wisely because they’re more dollar conscious and want to get bang-for-their-buck when purchasing a drink for the night.”

Danny Williamson, director of operations at Furious Spoon Ramen Shop in Chicago, Illinois, says restaurants’ beverage creativity has gone beyond just adding simple syrups to cover heavy alcohol notes. No longer tasting chemically manufactured, but fresh with complex profiles, voluminous flavors in high-quality distilled spirits, RTDs, and cocktails to-go help. Plus, “pricing has definitely become more advantageous for us to utilize in a program,” he adds.

Meanwhile, the team at Z’Tejas in Austin, Texas, and Scottsdale, Arizona, stirs up innovation with a fresh jalapeno cucumber margarita showing off spicy tequila, agave, and squeezed lime juice, says chief energizing officer Randy Cohen.

Christiaan Rollich, bar director at Scottsdale, Arizona’s Fat Ox, The Mission, and Zinc Bistro, took a salsa on their chef-driven, farm-to-table menu, broke down each ingredient, and used clarified tomato juice, cilantro, and jalapeno in a stunning cocktail to “bridge that gap from kitchen to bar,” Raab says. Rollich also handmade pistachio syrup to combine with cucumber, Corrido Tequila, and a dried chimichurri rim with parsley, cilantro, cumin, caraway, and salt to mirror their menu with a culinary-forward cocktail innovation. 

“You have to be willing to fail, and if you're not, you'll never create anything cool,” Rollich says, “Every single ingredient is made or juiced in-house; it changes the whole flavor profile of the cocktail.”

Aphotic uses housemade gin and 80 different botanical spirits distilled in-house for their cocktails including their signature martini with five of their distillates, Dulse, orris root, bitter orange, juniper, green tea, Noilly Prat original dry vermouth, and Bodegas Hidalgo manzanilla sherry. 

“One of the reasons beer isn’t growing in restaurants as much as cocktails is when you have one IPA, you're kinda full and your palate is shot, then you still have dinner,” explains Rollich. “Cocktails are more in line with appetizers and it's easier to have a few plus pair with your palate.”

Alongside booming top-notch spirits and RTDs, experts say profits follow suit for full-service restaurants. “When we look at spirits from a financial standpoint, it can be a better bang for the buck in what you get out of a well-crafted cocktail with your meal for that dollar amount versus drinking beer after beer,” explains Williamson, who says better quality and inventive spirits and RTDs help increase check average and diner incentive to purchase. 

For Cohen, their Jug Club for to-go gallons of margaritas peak in summer with a 15 percent increase in sales, and Furious Spoon’s RTD cocktails from Old Smokey and Greenbar Distillery are so huge in off-premise takeout and delivery sales they stopped selling fountain soda for a time.

Even the DISCUS report showed 82 percent of consumers preferred RTDs because “they taste better than beer,” and because of spirits’ growth, changes spill into policies like California’s SB277 legislation for fairer treatment of spirits-based RTD cocktails. “These lower tax rates make RTDs more affordable and in turn, stimulate industry growth,” says Teo, who co-founded California’s L.A. Spirits Awards. “If the policy in your state allows for it, and you’re not trying out [RTDs and cocktails to-go], it's a missed opportunity as an additional revenue stream.”

Because of diners’ altered sipping preferences, full-service restaurants now also select more diverse and inclusive spirits brands. “We try to be as inclusive as possible and try to find emerging brands,” Williamson says. “If it's something we test, taste, and people like it, we want to champion that brand because as we grow ours, we want to grow with people because it’s about relationships.” This lends to the spirit industry’s strength, too, with the widening variety promoting innovation. 

“We’re seeing a trend where people are more conscious about what they’re consuming and want to know about the brands, know the story, know where it's from, and the average consumer doesn't look the same,” explains Teo, “We have different backgrounds, races, ethnicities, and orientations, and with that diversity, consumers are identifying with the stories of these brands.” 

And those stories bubble up in restaurants’ bottom lines, says Raab. “When you have that story behind that product that’s special, unique, and different, that's where it's important for the restaurateur to gain more value out of it.” 

Make sure to have fun with distilled spirits so you translate that vibe to dining guests along with the story as a new spirit experience, adds Rollich. “I want to know why it's special because that story, that's how I sell to the customer.”