JANUARY 2026
Shifts in drinking habits bring big change P. 16
Inside a top-grossing indie P . 8 | C-stores borrow from restaurant playbook P . 26
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CONTENTS JANUARY 2026
MENU CONVENIENCE STORES BORROW FROM THE RESTAURANT PLAYBOOK, TURNING SIGNATURE MENU ITEMS INTO TRAFFIC DRIVERS...........26 CALIFORNIA FISH GRILL PACKS PROTEIN AND SUSTAINABILITY INTO 5 NEW BOWLS..........28 EMERGING BRANDS THE WORLD CUP IS COMING. SO IS THE MILANESA.......................................................30 THIS U.K.-BASED COFFE BRAND HOPES TO FIND A NICHE IN AMERICA’S OVERCAFFEINATED BEVERAGE LANDSCAPE..................................32
COVER STORY SHIFTS IN DRINKING HABITS BRING BIG CHANGES AT THE BAR...................................16 SPECIAL REPORT DUTCH BROS LEADS WITH MENU INNOVATION AND HOSPITALITY...................18
FINANCE WITH ITS NEW VALUE STANDARD, MCDONALD’S MAKES ANOTHER BIG CHANGE TO ITS FRANCHISE RELATIONSHIP....................................................4 PRIVATE-EQUITY GROUPS’ POOR REPUTATION COULD HURT THE BRANDS THEY BUY.............6 OPERATIONS DUCKS, BOATS AND STEAKS: INSIDE THE BOATHOUSE’S $51M RESTAURANT EXPERIENCE........................................................8
HOW SWIG AND HTEAO ARE POWERING THE BEVERAGE BOOM...........................................20
FOODSERVICE LEADS IN BEVERAGE SHARE, GAINING GROUND OVER RETAIL...................22
FEDERAL HEMP-THC BAN SIGNED INTO LAW AS PART OF THE SPENDING BILL........................24
HOW SHAKE SHACK PLANS TO WIN MARKET SHARE IN 2026..................................................12
THE BOTTOM LINE: IN THE FAST-FOOD WORLD, GROWTH IS COMING FROM DRINKS AND DESERTS ..............36 TECH CHECK: RESTAURANT LOYALTY PROGRAMS ARE FACING A BIG TEST...........................................................38 BEHIND THE MENU: COOPER’S HAWK ELEVATES ITS LIFE BALANCE MENU BY AMPING UP FLAVOR AND CRAVEABILITY...............................................................................................................................................................40 FROM OUR COLUMNISTS
Photo: Monin Cover Photo: Monin
JANUARY 2026 RESTAURANT BUSINESS
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FINANCE
WITH ITS NEW VALUE STANDARD, MCDONALD’S MAKES ANOTHER BIG CHANGE TO ITS FRANCHISE RELATIONSHIP The Bottom Line: The fast-food giant wants to ensure that its prices represent a good value. But in doing so, it is toying with a key tenet of being a franchisee: The ability to set prices.
M cDonald’s early this year will start grading franchisees based on the value they provide at their restaurants, yet that push could infringe on operators’ right to set their own prices and may diminish their profitabil - ity. That, at least, is the view of some opera- tors that worry that McDonald’s new value standard will ultimately damage the value of their restaurants. “One of the long-time shared principles in the partnership between the franchisee and franchisor has been the agreement that [owner/operators] maintain the ability to de- termine and set their own pricing, outside of national promotions, based on the dynamics of the local market,” the National Owners Association, an independent group of McDon- ald’s owners, wrote in a message to members, seen by Restaurant Business. “It is imperative that [owner/operators’] price independence continues.” McDonald’s announced a new value pro- vision to its global franchising standards in December. The goal is to ensure that its stores provide a good value based on local market conditions. Starting in January, McDonald’s will as- sess the outcomes of franchisees’ pricing de- cision in relation to providing value to cus- tomers. McDonald’s will assess operators’ use of pricing tools the company has available, their work with pricing consultants, support for system promotions and business perfor- mance. The company also said it would con-
sider local circumstances that affect individ- ual restaurants. In the process, the company stressed that franchisees would continue to set their own prices. McDonald’s reiterated that in a state- ment to Restaurant Business on Monday, while noting the need to ensure the chain’s value proposition. “Showing up for customers with great val- ue is just as important today as when we first opened our doors 70 years ago, and our fran- chisees understand that,” the company said in a statement to Restaurant Business. “As the new standards take effect next month, the tools and resources provided to franchisees will help them make informed decisions that enhance the overall customer experience while continuing to grow their businesses.” Yet McDonald’s value standards repre- sent the latest in an ongoing evolution of the franchise relationship under CEO Chris Kempczinski. Over the past several years the company has pushed aggressive remodels, changed its field operations team, toughened ownership standards and made it harder for relatives of franchisees to take over stores. All of that was done to speed decision-mak- ing, ensure consistent operating standards and give the company more control over the system. Its latest effort gets into a crucial part of being a franchisee: The ability to set prices based on local market conditions. Labor costs vary from city to city and state to state. Rent costs also vary. McDonald’s controls the real estate and charges franchisees rent based on
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RESTAURANT BUSINESS JANUARY 2026
PHOTO COURTESY OF MCDONALD’S
year who said McDonald’s was pushing him out of the system. Among the company’s com- plaints about the operator, according to the complaint: The operator didn’t use advisors to set prices and raised them too aggressively. The company’s value efforts over the past year and a half also haven’t quite brought in the traffic many hoped for, though McDon - ald’s says that they are working. “Marketing is putting together all sorts of value cam- paigns,” Lewis said. “He’s tried a lot of things the last three or four years from Chicago for the whole country. It just doesn’t work. What works in Iowa doesn’t necessarily work in California and doesn’t work in Texas.” On a more practical level, NOA worries that operators could be forced to lower prices “below sustainable levels, particularly in high- cost markets,” NOA said. If future profitability is uncertain, mean - while, operators may have to discount their restaurants in a sale process. There’s also concerned that parts of the
criteria could be subjective. “If ‘value lead- ership’ becomes a scored metric, franchisees might receive adverse evaluations based on evolving or subjective criteria,” the associa- tion said. A uniform value standard could also dis- proportionately penalize operators in regions with higher-than-average rent, high levels of low-margin transactions or scarcer labor pools that lead them to raise wages to attract workers. McDonald’s, for what it is worth, expects local differences to influence prices but also argues that the chain can be profitable and still offer good value. And there’s no question that the company needs to protect its value reputation. “All they’re trying to accomplish is keep- ing McDonald’s value image,” Lewis said. “They still have to be a value play, that’s a key tenet of the business and they’re not wrong. But they’re trying to control it from Chicago. It’s a sticky wicket.”
a percentage of sales. That percentage can be 18% or even higher in some cases. Despite McDonald’s assurances that oper- ators control pricing, the value standard was nevertheless viewed by some as infringing on that right. “It really changes the relationship owner/ operators have with the corporation,” said Jim Lewis, a former McDonald’s franchisee. “It’s a big change. It’s a really big change.” Yet it’s also a change McDonald’s believes is important. Franchisees raised prices aggres- sively coming out of the pandemic to offset their own soaring costs. But that has earned the ire of consumers, while brands like Chi- li’s have marketed against the chain’s pric- es. Sales and then traffic started falling, and though the company has recovered more recently, there remains deep concern about traffic from low-income diners. There is at least some concern that some franchisees are raising prices too much. The company was sued by one franchisee last
FINANCE
PHOTO: SHUTTERSTOCK
PRIVATE-EQUITY GROUPS’ POOR REPUTATION COULD HURT THE BRANDS THEY BUY The Bottom Line: The investment firms have been crucial to the growth of some restaurant chains. But consumers do not like it when one buys their favorite restaurant chain.
BY JONATHAN MAZE
P lanning to sell your brand to a pri- vate-equity group? Better hope your customers don’t find out. In December, the publication Texas Monthly wrote a profile on Whataburg - er, “Whataburger isn’t what it used to be.” The story, which was more benign than the headline might suggest, was a look at the ven- erable San Antonio-based fast-food chain six years after its sale to a private-equity firm. The story highlighted some complaints on social media from customers complaining about what they see as changes in the brand since its sale to a private-equity firm. Of course Whataburger is different. Lots of companies change over a six-year period, especially these past six years. And this is a chain with a new owner, new management and a mandate to take the brand national, a mandate we can only assume that the fami- ly that sold the chain endorses, given that it sold the brand in part to speed that growth process. Whataburger’s fans, however, are wor- ried about the impact that sale is having on the company. We see this plenty these days. A lot of consumers do not like it when their favorite restaurant chain is sold to a private-equity firm, and they’re paying close attention to that chain whenever that happens. To wit: Jersey Mike’s was sold early in 2025 to the private-equity firm Blackstone.
Some social media users have compared sand- wiches they bought from the chain before that sale to the sandwiches served now. One user saw their latest sandwich with a lot less meat and concluded this is proof that private equity is ruining the sandwich chain. Never mind that the owner of a franchisor system probably has more incentive to sell more meat, not less, or whether you can judge a full chain by the performance of one sandwich sold at one location during two separate visits. Also, Blackstone hasn’t owned Jersey Mike’s long enough to really ruin the chain. Private-equity groups do what they have been designed to do: Make money. Pension funds and other institutional investors need such groups to generate returns for their members. The restaurant industry has been a big beneficiary of such groups and need their investment to grow. Credit markets are often skeptical and difficult. Restaurants are too small and not technology enough to get all that much interest from public equity investors, so IPOs are often unavailable (and many such companies do not actually want to go public). Private-equity groups often step into that void. It’s also not as if private-equity firms are the only owners of companies that do bad things and make compromises. We’ve covered a lot of corporate malfeasance over
the years and a lot of it was at companies not owned by private-equity firms. All that said, private-equity firms do a lot of things that are certainly worth criticism. They make cynical bets on companies and decide either to invest in their growth or drain them of cash. They sell off assets too aggressively. They rely too heavily on franchising. They load companies with enormous amounts of debt. They push overly aggressive growth. They emphasize short-term results over long- term investment. They cut workers. Their aggressive tactics often lead to bankruptcy filings. Sixteen percent of bankruptcy filings are of private equity-owned companies. The consumer is keenly aware of such groups’ faults. Just look at responses to this question on the social media site Reddit on private equity. And of course there are plenty of headlines on private equity, like this one, this one or this one. Social media, as it does with just about everything else, has inflamed a lot of these concerns and fears. Consumers are so fearful of such firms’ impact on their favorite chains that they will literally take videos of their sandwiches and compare them with videos of the same sandwiches a year later. This makes private-equity ownership itself a risk factor in the ultimate performance of a restaurant chain even without factoring in whatever that firm does with the chain.
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OPERATIONS
BOATS, DUCKS AND STEAKS: INSIDE THE BOATHOUSE’S $51M RESTAURANT EXPERIENCE
Created by Steven Schussler, the visionary behind Rainforest Cafe, this high- volume Disney Springs concept is one of the nation’s top-grossing restaurants.
S teven Schussler is a man who understands how to create a dining experience. This is the man who created vividly experiential concepts like the Rainforest Café (dining in the jungle), T-REX (dining with dinosaurs) and Yak & Yeti (dining at the base of Mt. Everest), all concepts he later sold to Landry’s Inc. And then there’s The Boathouse at Disney Springs in Orlando, an incredibly high-volume restaurant Schussler created in partnership Perennially in the top five of Restaurant Business’ Top 100 Inde - pendent Restaurants, The Boathouse sailed to the No. 2 slot on this year’s list, barely being aced out by the high-end concept MILA in Miami. Both restaurants achieved just over $51 million in sales last year, though MILA came out slightly ahead. The glamorous celebrity hotspot, which opened in 2020, has an average check of $188 and served 271,461 meals. The Boathouse, meanwhile, reached that revenue number with an average check of only $51 per person, and the restaurant is 10-years old. About 985,695 meals were served last year at the 440- seat venue, which overlooks a man-made lake. It’s a tourist spot, sure. That’s Schussler’s specialty. But it’s one that is consistently praised for its food and atmosphere by tourists and locals alike. Here, the theatrics that Schussler is known for are toned down a bit (there are no animatronics) to a more classy level of kitsch. with Chicago-based Gibsons Restaurant Group. Here, Schussler exercises his passion for boats. There are boats inside the restaurant (one booth is in a gutted motorboat). Outside are 22 antique wooden boats (“floating works of art”). Guests also buzz past the windows in floating Amphicars that drive right into the water (20-minute rides are $125 for three adults). There is all manner of nautical artwork, photos and aphorisms, like: “There are small ships and there are big ships. But the best ships of all are friendships.”
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RESTAURANT BUSINESS JANUARY 2026
PHOTO BY HAILEY WILLIAMS
(“That’s trademarked,” notes Schussler. “We’ve trademarked more things than in the history of restaurants.”) And there are ducks. The gift shop (“The Boatique”) is full of them, from Elvis rubber ducks to T-shirts with sayings like “Quack quack, you duck hater.” The Boatique does about $5 million a year in sales, and duck merch alone generates an estimated $123,000 annually—though that’s not includ- ed in the restaurant’s $51 million revenue last year, which only refers to gross food- and-drink sales. The Boathouse is a well-oiled machine when it comes to turning tables, while also juggling multiple bars (including one on the dock), private events and weddings. This year, the restaurant expects to serve up nearly 100,000 steaks (about 275
per day); 2 million warm Parker House rolls topped with honey butter; 550,000 oysters (1,500 per day); and 43,000 bright blue Duck Duck Razz cocktails, each served with a tiny rubber duck floating on top. And then there are the desserts. Brad Warner, The Boathouse’s executive chef, said the restaurant expects to sell about 60,000 desserts this year, which he acknowl- edges is “insane” given one slice of key lime pie weighs more than a pound and serves six people. (In fact, the 21-layer chocolate cake, at $26 per slice, is so big and showy, when a slice is served, it’s like a virus that spreads around the room. “I’ll have one of those,” can immediately be heard.) The kitchen alone is 5,000-square-feet, but still not big enough. There are usually
about 500 employees staffing the operation (including the Amphicars and retail side), with about 30 front-of-house and 25 back- of-house managers/supervisors, 115 hourly line cooks, dishwashers and other staff, and 325 servers/hosts/bussers/polishers. The Boathouse’s menu was developed by the Gibsons group, a familiar name on the Top 100 list. Known for its Chicago-area steakhouses and concepts like Hugo’s Frog Bar & Fish House, Quartino Ristorante and Luxbar, Gibsons Restaurant Group has eight concepts on the Top 100 list this year—in- cluding The Boathouse, which ranks the highest. “Gibsons is, by far, the best I’ve ever seen, used or partnered with in the world,” said Schussler. “People may come once for that wow factor. They come once because
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PHOTO BY HAILEY WILLIAMS
we’ve built this beautiful place, we have the Amphicars, we have this beautiful décor. But they come back for the great food and great service.” When Schussler first pitched The Boat - house to Disney executives more than 10 years ago, he was initially told “no,” he said. Disney Springs already had a Rainfor- est Café, T-REX and Yak & Yeti. And, even though Schussler sold those concepts, he still considers them “his.” (Although Schussler is still mad that the new owners took the live birds out of Rainforest Café.) Schussler, however, is a man who be- lieves the word “no” is “yes” waiting to hap- pen. That’s literally a chapter in his book, “It’s a Jungle in There.” So he offered to build an architectural model of the Boathouse concept in about 1,000-square feet in the Disney offices, so people would walk by it every day. “I told them, I bet you after one week, people will say you’re crazy not to do that.” Disney also initially said no to the Amph- icars. But Schussler restored the charmingly retro vehicles (built in the 1960s) anyway and brought two to Disney Springs’ Lake Buena Vista, putting them in the water
(without permission). How did the Disney executives react? “Let me tell you, it wasn’t happy birthday,” he said. But those Disney executives paid atten- tion when a crowd gathered along the shore to take pictures and ask for rides. Now, The Boathouse averages about 85 to 100 rides a day. It’s all part of creating an experience, which, to Schussler, is as much about the smallest touchpoints (tiny cocktail ducks) as it is the big-swing theatrics. People in the restaurant industry often say, “Don’t sweat the small stuff.” Schussler thinks that’s, well, duck guano. To him, the small details add up to a last- ing impression. He is a self-professed “light- bulb nut,” who can spot a burnt-out bulb 100 yards away. “I’m not an expert in anything, but I see things no one else sees,” he said. At his lab in Minnesota, he continues to develop new restaurant concepts, each with its own story. There’s Aerobleu, based on an imaginary character from France who won a DC-3 plane in poker game and travels the world
listening to jazz. That restaurant will be lit by almost 100 juke boxes, if Schussler has his way, and will have certain comic touches (urinals shaped like saxophones and toilets shaped like tubas). There’s the Asian concept Zi, for which Schussler has collected some $40 million worth of Chinese artifacts from the Qing Dy- nasty. “We’ve been working on that one for 25 years,” he said. And Winter Wonderland, where it’s Christmas year-round, has trains, trees that are syrup dispensers and snow that falls in- doors but dissipates before it hits the floor. Perhaps, he said, there could be another location for The Boathouse—with the right real estate, he said. Schussler, who is up front about the fact that he asks landlords for a considerable con- tribution, said there would have to be a cer- tain volume of foot traffic, along with room for retail. And water, of course. There are deals in the works, but he can’t reveal details just yet. “For me, it’s not about the money,” said Schussler, who makes the statement with believable conviction. “It’s about putting smiles on people’s faces.”
PHOTO BY LISA JENNINGS
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RESTAURANT BUSINESS JANUARY 2026
Connect with Top C&U Decision Makers Across the Country in 2026
This isn’t just networking - it’s where industry leaders exchange transformative ideas that impact menus, operations, and careers.
March 16-18, 2026 University of Illinois Urbana-Champaign, IL
June 22-24, 2026 University of Michigan Ann Arbor, MI
August 3-5, 2026 University of California Davis Davis, CA
October 19-21, 2026 NC State University Raleigh, NC
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OPERATIONS
PHOTO: SHUTTERSTOCK
HOW SHAKE SHACK PLANS TO WIN MARKET SHARE IN 2026 The burger chain has been an outlier in the fast-casual segment, showing strong results. At the Raymond James conference this week, CEO Rob Lynch explained what’s working.
BY LISA JENNINGS 2 025 was not a great yearfor fast- casual restaurant chains. But one notable standout? Shake Shack. The New York City-based burger chain was one of the few fast-casual concepts to see positive traffic in the third quarter, and CEO Rob Lynch said those trends have continued into the fourth quarter. In fact, in an end-of-year fireside chat at the Raymond James TMT Consumer Conference in New York,, Lynch said he’s expecting a strong 2026 for the brand, despite macroeconomic headwinds that are making younger and middle-income consumers a lot choosier about where they spend their dollars. The former CEO of Papa Johns, Lynch joined Shake Shack about 18 months ago. Since then, he has set Shake Shack on a growth path. The nearly 380-unit chain is planning to quadruple its domestic unit count to 1,500 company-owned units. This year, the chain expects to add 45 to 50 new restaurants—the most Shake Shack has ever opened in one year. And that number is expected to reach up to 60 in 2026. That growth comes as the brand strengthens operations, Lynch said. Here are some of the initiatives that Lynch said will pay off with continued momentum: TARGETING THE MARKETING Shake Shack doesn’t have a footprint large enough to leverage national marketing, so the chain is working on very surgical and strategic investments in the top 20 markets where they expect to see the most return, Lynch said.
“We’re not all the way to bright,” said Lynch. “We still only invest 2.5% to 2.7% of revenue in marketing, which is significantly less than a lot of our peer group. But we’re making a lot of progress and we’re learning along the way.” The focus will be on digital marketing, both social and Connected TV, that will find people within five miles of a Shack Shack to try to engage. “It’s about finding the right people, in the right spot at the right time,” he said. The message? It will be all about Shake Shack’s made-to-order food and quality ingredients, he said. In the chain’s third- quarter earnings call, he said “Crackable” shakes will be on the menu lineup, as well as a French Dip Angus Sandwich, and a Baby Back Rib Sandwich, for example. And Lynch noted that Shake Shack doesn’t yet have a loyalty program, which is currently in the works. That will help attract more teenagers, who Lynch said never want to spend money without earning points. DISCOUNTING, BUT DISCOUNTING LESS THAN OTHERS Shake Shack in the third quarter reported success with app-based offers for $1 drinks, $3 fries and $5 classic shakes. It’s discounting, sure, but Shake Shack is not planning to launch a $5, or even $10 meal anytime soon. Lynch estimates that 40% of sales in the quick-service world are from discounts. At Shake Shack, meanwhile, it’s “below single digits,” he said. And, if discounts get customers in the door to try the food, it’s worth it, he added. “I feel great about our ability to leverage promotions to get our food into people’s mouths.”
Shake Shack has been investing in building traffic through its app, which is up 50%, and those contacts will roll into the loyalty program when it’s launched. “That’s going to be a big improvement in our value perception,” he said. “We have an app that makes up less than 10% of our business today. That’s where we’re offering the biggest value, and it’s driving the traffic in there. And the lifetime value those app users is much higher than the occasional tourist or whoever comes in infrequently.” Shake Shack has also been very disciplined about pricing, he said, despite higher beef costs. The chain has also increased operating margins. “How have we done that? Productivity,” he said. “We’re better operators today than we were six months ago, 12 months ago, six years ago.” OPERATIONS AND SPEED One challenge for Shake Shack is that food is made to order. Still, Shake Shack
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our business. Operations is blocking and tackling.” DE-RISKING THE SUPPLY CHAIN Lynch said Shake Shack has only scratched the surface on reworking its supply chain. That’s a big initiative for 2026. His goal is to take the risk out of the supply chain, which has long been relying too heavily on single sources, he said. “If that supplier gets hit by a hurricane or they just decide to go out of business, it disrupts our business,” he said. “So over the last six months, we’ve conducted RFPs across almost every facet of our business, and brought in multiple people to come in and compete for our business.” That has resulted in better quality and price, he said. FLEXIBILITY WITH GROWTH Shake Shack has seen more traffic challenges in larger urban markets, like
New York and Washington, D.C. “We’ve got great, high-volume restaurants in New York, very profitable, but not growing as rapidly as the resta of the country, and some of that is macro and some of that is micro,” he said. “We have some things to fix here.” But elsewhere, the brand is going gangbusters, in regions like Florida, Texas, Arizona and the Midwest, he said. “So that’s where our new restaurants are growing.” Texas, in particular, has responded incredibly well to marketing over the past six months, he said. And international growth is another opportunity. Shake Shack’s 235 international locations are licensed, and Lynch said the chain has been very selective about the partners overseas. The chain has developed some new smaller formats to give those partners more flexibility with real estate. And the brand has worked with then to develop menu items that fit better for specific regions, like a fish sandwich in Hong Kong, for example.
has gotten faster, cutting one minute from service times, said Lynch. And the chain has done that by becoming more efficient with labor. Restaurants used to ask the full crew to show up at opening at 10:30 a.m., for example, but the full crew wasn’t needed then because business didn’t get started for another hour. Now restaurants deploy more of those workers at peak times instead, which has helped speed service. That move has also improved retention. Shake Shack six months ago had an average turnover of 90 days for hourly employees. That has increased to 180 days. Other kitchen tweaks have paid off. The restaurants used to cook bacon on the flattop, which took needed cooking space away from burgers. So Lynch brought in ovens that could be used for cooking bacon to free up the space on the flattops to cook more burgers. “It’s not rocket science,” he said. “These are not things that Elon Musk is going to invest in. But it’s transformative for
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COVER STORY
SHIFTS IN DRINKING HABITS BRING BIG CHANGES AT THE BAR Moderation, functional beverages and alcohol alternatives are driving the trends, but cocktail culture is still going strong. It just looks a little different.
T he statistics may be enough to convince a bartender or beverage director to toss the cocktail shaker in the trash. Data varies, but it mostly points to the fact that younger consumers are drinking less alcohol. According to a Consumer Sentiment Survey by NCSolutions, a Circana company, 65% of Gen Z planned to drink less in 2025 and 39% planned a completely dry lifestyle. And the trend is not limited to Gen Z. The same survey found that 49% of all Americans planned to drink less in 2025, up from 41% in 2024. Granted, this survey was taken during “Dry January,” when plans to cut back are made but not always kept. Recent stats from Technomic are a little more encouraging for bar owners: “Moderation culture is happening, but that’s not about everyone quitting drinking,” • 37% of consumers are purchasing alcohol at casual dining and bars • While the fastest-growing beverage category on restaurant menus is alcohol-free (up 18.7% ), spirits are up 7.8% and specialty cocktails up 4.8% • “Zebra striping” is on the increase; switching off between alcoholic and zero-proof drinks at bars and restaurants. Among guests who ordered an adult beverage, 30% paired that with a nonalcoholic cocktail, beer or wine
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PHOTO COURTESY OF MONIN
said Erica Deucy, founder of the Business of Drinks strategic advisory company and podcast. “It’s a story about consumers editing what they drink, and this offers more opportunity for operators to expand their choices at the bar; integrating low-ABV, no- ABV and full-strength drinks into one menu.” Whether we call it zebra striping, flexi- drinking, mindful consumption or sober curiosity, these customers are looking for more choices. CRAFTING A DRINKS LIST At Milly’s, a neighborhood bar in Brooklyn, New York, master mixologist and co- owner Lynnette Marrero offers an eclectic mix of flavor-forward cocktails in several categories: low-alcohol, nonalcoholic and full-proof. Her goal is to create beautiful
cocktails that people can’t do at home with ingredients they often don’t have on hand. The Red House, for example, is a blend of rum, ginger, hibiscus and lemon and can be made full-strength or zero-proof, while Le Moné-Ade is a low-ABV drink crafted with Meyer lemon, elderflower, quinquina (similar to vermouth), white wine and soda. All are integrated into the same list. “It’s a bar where everyone can get what they want,” Marrero said. Nonalcoholic (N/A) sales are outpacing spirits on some nights and pricing is thoughtful, she adds, with specialty cocktails going for $16-$17, classics for $15 and zero-proof drinks in the range of $12-$15. Tempo by Hilton was a pioneer in the mindful drinking space, launching a Spirited and Free-Spirited cocktail program in 2023.
The original list included nine signature drinks where the recipes used the same ingredients, swapping in nonalcoholic products in the Free-Spirited cocktails for the traditional tequila, vodka and bourbon. The presentation and flavor of the drinks mirrored each other, and the dual-branded program listed all the options on the same menu. “Over 25% of the cocktails ordered were Free-Spirited,” said Kevin Morgan, global brand leader of Tempo by Hilton. This January, a refreshed lineup is coming to the five Tempo by Hilton properties. “We turbo-charged the program, partnering with expert Derek Brown to create 10 new drinks,” said Morgan. Brown is the founder of the Drink Company, which is dedicated to fostering mindful drinking and a more inclusive bar culture through innovative
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PHOTO COURTESY OF TEMPO BY HILTON
no- and low-alcohol cocktails. He not only capitalized on the improved quality and larger number of brands in the N/A category, he incorporated functional ingredients and house-made tinctures into the recipes. Rye of the Tiger, for example, uses a tincture made from Lion’s Mane mushrooms, believed to promote brain health and have anti-inflammatory properties. Brown combined the tincture with maple syrup, orange bitters and rye in the Spirited cocktail, and substituted Lyre’s American Malt for rye in the Free-Spirited version. Both are garnished with a dehydrated pineapple wheel. Sage Against the Machine, another Brown- crafted drink, swaps in Fluère Botanical for gin; both versions of the cocktail are mixed with lemon juice, celery bitters, aquafaba for foaminess and Nogave syrup. Nogave is a sustainable product that mimics agave; the latter has been over-harvested to meet the increased demand for tequila, mezcal and agave syrup. Pricing is market-dependent, but for the most part, the Spirited and Free- Spirited drinks are close in price. “The same craftsmanship goes into both and the N/A products are similar in cost,” said Morgan. As at Milly’s, the trend is to weave N/A, low-alcohol and full-strength options throughout the drinks menu, not isolate them
into separate categories, said Deucy. “Flexi- drinkers may order all three at the same visit—starting with a cocktail then moving on to a lower or no-alcohol option.” She agrees that “mirror menus” like Tempo’s are the best approach for a restaurant or bar. “Build non-alcoholic versions of your most popular cocktails, like a negroni or margarita, and serve it in the same glassware,” said Deucy. “That allows all drinkers to have the same experience.” She also sees spritz culture really taking off. Spritzes use wine—both sparkling and still—as the alcohol base, which lowers the proof of the drink. “Wine cocktails and spritzes are menu must-haves and growth drivers,” said Deucy. Indeed, Tempo’s top- selling cocktail over the past two years was the Amalfi Toast—a spritz crafted with Lyre’s Italian Spritz, white cranberry juice, Lyre’s Italian Orange and bitters in the N/A version, with vodka and Aperol standing in for the buzzy drink. MOOD-CENTRIC MENUS Functional ingredients (like the lion’s mane mushrooms in Tempo’s Eye of the Tiger) are increasingly finding their way into cocktails. “Lemon balm, ginger, turmeric and similar Ingredients can give you a ‘better buzz’ and lift your mood,” said Marrero. Consumers,
especially younger ones, are looking for ways to have an adult experience and relax without alcohol. Toward that end, Marrero joined Aplós, a rapidly growing nonalcoholic spirit brand, as liquid creative director. Aplós focuses on functional ingredients such as hemp, adaptogens and mushrooms that produce a calming, uplifting or energizing effect. Marrero helped develop the ready-to-drink cocktails with flavor profiles that mimic popular drinks: Kola Fashioned, Ume Spritz, Chili Margarita and Mandora Negroni, sold in cans at her bar and others as well. There’s also Aplós Arise and Aplós Ease, zero-proof spirits that can serve as the base for house- crafted cocktails built around how people want to feel. “Aplós is now served at Cote, a high-end Korean steakhouse in New York City,” said Deucy. On the menu is Cratos, a mix of Arise, watermelon, electrolytes, ginger and lime, and the Ume Spritz, a blend of plum, lion’s mane, magnesium, hemp and grapefruit; both are $15. Mentioning the functional ingredients contained in a cocktail can double sales, according to the company, and restaurants have the opportunity to market drinks around mood states, said Deucy. “More bars and restaurants will call out functional
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in local culture or embracing new forms of creative expression through cocktails,” said Sean Kerry, VP for global for Bacardi, in a statement. Milly’s is leaning into this trend, said Mar- rero, nurturing the bar as a gathering place. “It’s that ‘third place’ motivation, a comfort- able spot to get together with friends or col- leagues,” she said. “Milly’s looks like a living room and exudes warmth and hospitality, with a DJ playing good music on weekends.” Gen Z and millennials are gravitating to- ward these kinds of bars—less raucous, more inviting spaces that encourage connectivity and community. Local spirits often come into play, too. Some of Milly’s inventory is in lo- cal spirits, and Marrero calls them out on the menu as “they tell a nice story,” she said. Indeed, storytelling is playing a bigger role in cocktail culture. “Bars can tap into lo- cal distilleries not to replace but to elevate a program,” said Deucy. “Regional and local sell and tell a good story,” she agreed. LOOKING AHEAD As we head into 2026, smart operators will continue to offer a menu mix of N/A,
low-alcohol and full-strength drinks. But what flavors, formats and presentations will meet consumers’ drink expectations? While classic cocktails, spritzes and ze- ro-proof spirits are table stakes, color and flavor will have an impact as well. “We’ll see more dynamic flavors and stacking of flavors; up to nine flavors stacked in one drink, as well as culinary-inspired cocktails,” said Michael Moberly, beverage innovation manager at Monin, a supplier of syrups and purees to bars and restaurants. Color is also a draw. “Colors move drinks and give a cocktail personality,” he said. Pair that with eye-catching glassware and gar- nishes, and the drink has a good chance of go- ing viral—a feat Outback accomplished with its Puggle Splash, available in both a boozy and nonalcoholic version. The casual-dining chain served each version with a plastic egg containing color-changing butterfly pea tea to create an interactive experience. Guests stirred the tea into the drink to turn it purple and got to take home the platypus toy gar- nish. In the end, “people want to have fun when they drink,” said Moberly.
PHOTO: SHUTTERSTOCK
attributes to differentiate the cocktail list,” she predicts. The only drawback is the potential ban on hemp products looming next year, an indication that the federal government as well as local agencies are seeking more regulation. But ingredients like mushrooms and most botanicals should be safe. THE RISE OF THE ‘DAYCAP’ Consumers are reshaping how and when they go out, said Deucy, which is giving rise to “afternoon society” and “daycaps”— cocktails enjoyed in the late afternoon to close the workday. “Gen Z wants to go out at 4 p.m.” she said. It’s the new iteration of happy hour and alternative to late night drinking. Deucy cites recent data from the Bacar- di Cocktail Trends Report which shows that 30%-40% of people are going out earlier and seeking lighter, more intentional drinking occasions—a trend led by younger consum- ers. “Around the world, we’re seeing a move towards more meaningful drinking moments whether that means in-person get-togeth- ers with friends, discovering flavors rooted
PHOTO COURTESY OF MONIN
JANUARY 2026 RESTAURANT BUSINESS
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SPECIAL REPORT
DUTCH BROS LEADS WITH MENU INNOVATION AND HOSPITALITY
Menu Talk: CMO Tana Davila shares how the fast-growing chain differentiates itself in the competitive beverage segment.
BY PATRICIA COBE
With an early focus on cold coffee, energy drinks and a flavor-forward menu, Dutch Bros has established itself as a leader in the increasingly competitive beverage segment. CMO Tana Davila joins the Menu Talk podcast to share how the brand combines menu innovation and hospitality to create a culture that connects with guests. Customization continues to be a key trend valued by consumers, and Dutch Bros has long been at the forefront of that trend. The menu offers a large selection of coffees, lemonades, matcha, smoothies, shakes and the chain’s signature Rebel energy drinks, all of which can be customized. Davila describes how limited-time seasonal items are also a big draw, including summer’s colorful and refreshing mocktail-inspired drinks and the current line of holiday beverages. And an expanded food program is in test, designed to drive beverage sales and frequency throughout the day. As CMO, Davila also prioritizes the hospitality side. She shares how Dutch Bros’ unique service culture is a differentiator and why community engagement is built into its mission. The Dutch Rewards Program also fosters a strong customer connection, she points out. Listen as Davila talks about Dutch Bros’ push into the CPG space, how menu innovation is shaping up for the future and the plans for growth as the chain moves East from its West Coast roots. NOVEMBER 25 • MENU TALK 20 MINUTES
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IT ALL STARTS WITH POTATOES IDAHO ®
IDAHO ® RUSSET POTATOES
VEGETABLE SUSHI ROLL Chef Tiffany Sawyer First Hospitality
SPECIAL REPORT
PHOTO COURTESY OF SWIG
HOW SWIG AND HTEAO ARE POWERING THE BEVERAGE BOOM One concept is a destination for dirty sodas, the other for iced teas, but both share similar strategies that are driving growth in the competitive beverage segment.
S wig was first to the dirty soda trend and HTeaO got a head start as an iced tea-only chain. But as the beverage category heats up with more competitors, how are these two hot concepts contin- uing to stay ahead? Alex Dunn, CEO of Swig and Heath Nielsen, president of HTeaO, each tackled that question at Informa Connect’s Future of Beverage conference, held in Austin, Texas. Although the two beverage compa- ny heads spoke during different sessions, they related several similar strategies. Top of both lists: Customization and personalization are at the core of their success. “Sodas are a $300 billion industry, so the demand is there. But con- sumers wanted more—more options and more flavor profiles,” said Dunn, in talking about Swig’s mission. “At Swig, people order ‘their drink,’ like at Starbucks. It’s customization with a base of soda instead of coffee or tea.” When Swig was ready to expand from its home base in St. George, Utah, there was a lot of skepticism from investors as to whether dirty sodas were sustainable outside the state, said Dunn. “I spent a lot of time answering those questions, then something clicked,” he said. “I posi- tioned Swig as the Starbucks of carbonated drinks … we were reimagin- ing the way people consumed sodas, just as Starbucks did with coffee.” HTeaO is also in the reimagining business, this time, with iced tea as a base. “You walk in and there are 26 flavors of iced tea, all in bubblers,” said Nielsen. “The average size drink is 40 ounces, and customers mix and match, adding blueberry, watermelon, peach and more to sweet tea.” The combinations are practically endless and as at Swig, every per- son is crafting “their drink.” At HTeaO, customers can also get energy shots, protein additions, hydration boosts and other add-ons, but while 80% of the business is self-serve, an employee has to add the extras. Both concepts are also very picky about their base product. “Our black and green tea is brewed in house every day with a team of 20
PATRICIA COBE
PATRICIA.COBE@INFORMA.COM
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RESTAURANT BUSINESS JANUARY 2026
Swig’s hit LTO this spring was the Dirty Little Secret, a mix of Dr Pepper, coconut, pineapple and vanilla cream, promoted through its connection to “The Secret Lives of Mormon Wives.” The characters in the popu- lar reality show often stop by Swig. Seasonal fruits do well; pumpkin not so much. Swig tried a pumpkin dirty soda this fall and it was too polarizing; some people loved it, but others hated it, Dunn said. “It’s okay to make mistakes and admit it, then iter- ate. The speed at which you iterate matters.” At HTeaO, customers have favorites, but LTOs are an opportunity, said Nielsen. “I love collaborations, and we recently did one with
Poppi sodas and another with Perrier to bring in carbonation,” he added. The result was a summer LTO of Fizzy Refreshers in flavors including Lemon Lav and Desert Pear. Another piece of the success puzzle has to do with consistency. Both concepts guarantee a consistent, refreshing experience and prod- uct. And that has led to consistent growth. According to the most current data from Res- taurant Business sister company, Technomic, Swig earned over $87 million in sales and counts 117 locations in 16 states, and HTeaO has more than $101 million in sales and 144 units in 10 states.
brewers,” said Nielsen. Swig uses patented carbonation technolo- gy for its sodas and is “maniacal about mak- ing the drinks, all the way down to the ice, making sure it’s in the right proportion to the liquid,” said Dunn. At HTeaO and Swig, the beverage busi- ness revolves around “pick-me-ups,” where customers come in for a boost, often in the afternoon. In fact, the idea for HTeaO came about when the founder noticed many of his employees at a previous company leaving in the afternoon for a break and discovered they were going out to get an iced tea. “Customers come in for a pick-me-up, but they become regulars because of their inter- action with the people who make your drink,” said Dunn. At Swig, they’re called “Day- makers” because they’re trained to “make a guest’s day.” Speed is also key to both concepts. A morning or afternoon pick-me-up has to be quick, whether a worker is taking a break or a busy mom is running her kids around. Nicole Tanner Robison was exactly that busy mom of five when she opened the first Swig 15 years ago. As their menus and locations expanded, both concepts felt the time was right to add limited-time offers to keep interest high. “We limit LTOs to quarterly, trying to come up with flavor profiles that are unique but wide - ly appealing,” said Dunn.
PHOTO COURTESY OF HTEAO
JANUARY 2026 RESTAURANT BUSINESS
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SPECIAL REPORT
FOODSERVICE LEADS IN BEVERAGE SHARE, GAINING GROUND OVER RETAIL Sales of beverages in restaurants are forecasted to grow into 2029, while convenience stores are seeing a decline, finds Technomic.
BY PATRICIA COBE
PHOTO: SHUTTERSTOCK
B oth adult drinks and nonalcoholic beverages are increasing on restau- rant menus, reversing a long-term decline, reported Technomic at In- forma Connect’s Future of Beverage Confer- ence. Rich Shank, senior principal and VP Inno- vation at Technomic, opened the conference with an overview of State of Beverage: Inno- vation Playground, Growth Opportunity. He sees overall beverage growth increasing by over 1% into 2029, and more of that growth is coming on restaurant menus. Adult bever- ages are up 2.8% on menus and nonalcoholic beverages, 5.1%, year over year. Shank attributes this surge to several factors, he told the audience. Operators are leveraging beverages as snacks and cus- tomization is driving growth. What’s more,
purchasing beverages as a pick-me-up has grown, motivating 22% of consumers to- wards a sale. But consumers, especially those in young- er age groups, are looking for beverage diver- sity. Gen Z and Millennials gravitate toward bubble tea, cold and frozen blended coffee, hot specialty coffees, kombucha, energy drinks and milkshakes. It’s the “challenger” brands like 7 Brew, Dutch Bros, Scooter’s Coffee and Black Rock that are driving interest in alternative bever- age formats, Shank told the audience. They all saw year-over-year growth in traffic, while legacy brands such as Caribou Coffee, Tim Horton’s and Starbucks experienced de- clines. The challengers all offer more ways to customize and enhance beverages. How can operators stay ahead of the
curve? Technomic offered predictions on “what’s next.” Consumers are looking for beverages that offer even more customization, allow- ing personalization of mix-ins, enhancers and toppings, along with an expansion of taste horizons. But Shank warned against too many options, as customers can become bogged down by the proliferation of choices. Health is a factor, too, with functional in- gredients and hydration priorities, but those same drinkers are also seeking indulgent beverages. Operators need to cater to that bifurcation and offer a balance of healthy and indulgent choices. The Future of Beverage conference was hosted by Informa Connect, parent company of Restaurant Business and Tech- nomic.
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SPECIAL REPORT
FEDERAL HEMP-THC BAN SIGNED INTO LAW AS PART OF SPENDING BILL Passage of the legislation ends the long-running government shutdown. But it also could spell the end of a beverage category some view as a major potential growth driver.
BY HEATHER LALLEY HEATHER.LALLEY@INFORMA.COM
P resident Donald Trump late last year signed a spending bill that had previously received approval from both chambers of Congress, ending the 43-day government shutdown, and, in the process giving a federal stamp of approval to a ban on hemp-THC products that have recently emerged as a major growth channel in convenience stores, grocery stores and restaurants. The provision banning hemp-derived THC drinks, gummies and other items was slipped into the federal funding bill just before the Senate voted on it Sunday. Sen. Rand Paul (R-Kentucky), whose state has a large hemp- growing industry, wrote an amendment to the bill, but it failed. Paul’s fellow senator, Mitch McConnell (R-Kentucky), added the language to the funding bill that would ban all hemp products with more than 0.4 milligrams of psychoactive tetrahydrocannabinol, or THC, per container, saying the move was intended to protect minors from accessing the products. Under the legislation, hemp-THC suppliers and distributors now have one year before the full ban is enforced, unless the law is changed before that time. Diana Eberlein, who lobbies on behalf of the low-dose THC industry in her role as chairperson of the Coalition for Adult Beverage Alternatives, called the 365- day implementation rule “a lifeline, an opportunity.”
“It is not ‘the end,’” Eberlein said in a LinkedIn post. “It is a runway.” She urged those who care about preserving the industry to mobilize to work to build a “durable regulatory structure.” The ban closes what some viewed as a “loophole” in the 2018 farm bill that allowed for the nationwide sale of products containing 0.3% hemp-THC by weight. In the years since, the segment has grown into an estimated $28.3 billion industry, with hundreds of suppliers producing seltzers, sodas, shots, spirit analogues, gummies and more containing low doses of THC. Not to be confused with items sold in dispensaries in states where marijuana legal, these products can be sold in c-stores, grocery stores, restaurants, bars and via direct-to-consumer channels in dozens of states that allow them. Most contain anywhere from 2 milligrams to 10 milligrams of intoxicating THC per serving. C-store giant Circle K recently started selling hemp-THC beverages in Georgia and Florida, with plans to expand to more states. “We believe this is going to be huge,” Rebekah Stevenson, Circle K’s head of packaged beverage, said last month at the NACS Show in Chicago. Big box retailer Target last month started testing a selection of hemp-THC drinks at a small number of Minnesota locations. In May, the National Restaurant Association hosted a “hemp pavilion” for the
first time at its annual trade show in Chicago. As alcohol use has declined, more consumers have made the shift to THC. Last year, daily and near-daily marijuana users surpassed regular alcohol drinkers, according to a Carnegie Mellon University analysis of more than 40 years of national survey data. In the immediate aftermath of the bill’s passage, hemp-THC suppliers and others are weighing next steps. Some have said they are looking at pivoting to selling products infused with mood- and health-boosting adaptogens. Some smaller companies likely will not have the financial resources to withstand the period of uncertainty. Others are continuing to lobby for federal regulations on the products, in the same manner as alcohol, tobacco and other age-restricted items, in hopes of reversing the ban, saying a full prohibition on hemp- THC will only serve to open the door to bad actors who produce high-potency, un-tested products. “Millions of adults across the country have made it clear they want balanced, non-alcoholic options for social enjoyment, including low-dose THC beverages,” Angus Rittenburg, CEO and co-founder of hemp-THC seltzer brand WYNK, said in a statement. “The demand is real, and growing. Our industry has responded by creating safe, transparent, rigorously tested products sold through age-gated retail … We strongly support sensible, science-based regulation.”
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