The U.S. surgeon general’s new push to warn consumers about the link between drinking and cancer comes at a precarious time for restaurant owners trying to pencil out a profit that hinges on alcohol sales.
Costs of food and labor have risen, and some inflation-weary Americans continue to cut back on eating out. Sales dipped 1.7 percent between November 2023 and November 2024, according to the National Restaurant Association.
When people do go out to eat, some aren’t drinking as much. Members of Generation Z in particular are moderating how much they consume and have helped popularize terms like “sober curious” and “California sober,” in which cannabis replaces alcohol. A September survey showed 32 percent of all consumers who drink at least a few times a year were drinking less often in 2024 than before the pandemic, according to the research firm Datassential.
“We are in a new era of nonalcoholic drinking,” said Renee Wege, a trend expert and publications manager at the company.
Surgeon General Vivek Murthy warned on Friday that alcohol is a preventable cause of cancer, and called for reconsidering the federal government’s guidelines for how much Americans can safely drink. As with cigarettes, he said, the cautionary labels already on alcoholic beverages should mention the risk of cancer.
For restaurants constantly trying to offset rising rent, food and labor costs, sales of alcoholic drinks have long provided a reliable income stream. A 2023 report by the National Restaurant Association showed that they made up about 21 percent of all sales at full-service restaurants. At some fine-dining establishments, the number was closer to 30 percent.
It’s too soon to know if the report, coming after years of warnings about the health hazards of drinking and the rising use of GLP-1 drugs that can reduce the desire to drink, will slow alcohol sales at restaurants even more. But owners are bracing for that, and many have already turned to offering more nonalcoholic beverages.
“This news we’ve just gotten is probably going to affect things,” said Tracy Vaught, who owns five restaurants in Houston with her husband, the chef Hugo Ortega.
Alcohol sales at her restaurants have been falling. In 2015, they produced 31.5 percent of the company’s income. Last year, that share slipped to 27.5 percent. “It doesn’t seem like much, but it really makes a difference,” she said.
Although alcohol generates far less revenue for restaurants than food, profit margins on drinks are much larger, and the financial risks for owners are fewer. Unlike a walk-in refrigerator filled with perishable food, the bar is stocked with inventory that doesn’t go bad. Labor costs at the bar are easier to manage, too.
At the Atlanta restaurant Gunshow, sales of alcoholic drinks account for about 30 percent of all revenue, but they provide about 80 percent of the profit.
“Margins for food have decreased so significantly over the last four years that without a solid beverage program, restaurants can’t make it,” said Kevin Gillespie, who owns Gunshow and the tasting menu restaurant Nàdair. “But there are creative paths out of this.”
Customers might not want alcohol, but many still want a cocktail. It’s a challenge to make sophisticated nonalcoholic drinks as appealing as their spirited equivalents, but done right they can be priced almost identically, Mr. Gillespie said.
Ryan Schmied, director of food and beverage at the Amway Grand Plaza Hotel in Grand Rapids, Mich., took action a year ago, after noticing a dip in sales of alcoholic beverages, especially beer and wine.
Some changes were easy, like adding no- and low-alcoholic beer and wine, and expanding bottled-water offerings at six of the hotel’s eight bars and restaurants. He capitalized on customers’ growing preference for quality over quantity. For years, inexpensive wines by the glass were top sellers. “Now we are selling more and more $20 and $30 glasses,” he said, “and mind you, we are in Grand Rapids.”
But cocktails without liquor have made the biggest difference in bolstering his bottom line. The copa verde, with nonalcoholic spirits, a honeydew-almond cordial, pandan and Sanbitter, sells for $15 at the hotel’s Spanish restaurant MDRD — the same price as most of the other specialty cocktails on the menu.
Drinks without alcohol now account for about 15 percent of all beverage sales at the restaurants and bars in the hotel. “It sounds like a small number, but 10 or 15 percent can make or break a place,” he said.
In Manhattan and parts of Brooklyn, alcohol is essential to running a successful restaurant business, especially given recent increases in the cost of ingredients, rent, insurance and labor, said Chase Sinzer, an owner of Claud and Penny in the East Village.
“If you can sell more booze than the other person, you have a greater chance of economic survival,” he said. “It’s a very scary world without it.”
It’s easier to plug holes in the budget by charging more for drinks. Customers have fixed ideas about what menu items should cost, but there’s more flexibility in what they’ll spend on cocktails, beer and wine.
“They’ll say, ‘I’m paying this much for a piece of chicken?’” he said. “When chicken costs 75 percent more than it used to and we can only raise the price 25 percent, you’d better sell some booze. No one spends more on chicken than the next table, but people make different choices about alcohol.”
Not all restaurants are seeing a drop in alcohol sales. John Ragan, president of fine dining restaurants at Union Square Hospitality Group in New York City, said guests are looking for wines lower in alcohol, but aren’t noticeably drinking less.
In the 18 years he’s been on the job, he’s seen drinking trends come and go. When “60 Minutes” aired a segment in 1991 suggesting red wine was the reason the French had a low incidence of heart disease despite their high consumption of fat, sales of red wine jumped.
The surgeon general’s report might stir some waves, Mr. Ragan said, but it’s unlikely to cause a seismic shift in drinking habits. “There might be some ebbs and flows, but I think whatever your favorite pairing is at the table I don’t perceive changing in a big way,” he said.
At Twisted Soul Cookhouse & Pours in Atlanta, more customers are “pre-gaming” with a drink or two at home, said creative director and owner, Deborah VanTrece. And more people are ordering nonalcoholic cocktails. But she and her team haven’t seen a drop in alcohol sales.
That’s in part because customers are willing to spend $30 or more on specialty cocktails featuring expensive liquors like the hard-to-find SirDavis American Whisky, from Beyoncé.
But if the surgeon general’s warnings get traction and Gen Zers continue to drink less, income from alcohol could drop.
“For the most part, right now we feel steady,” she said, “but people will at some point generally jump on a bandwagon, so I’m not saying it’s not coming.”
Pete Wells contributed reporting.
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