Drinking Places

SIC 5813

Companies in this industry

Industry report:

This category includes establishments primarily engaged in the retail sale of alcoholic drinks, such as beer, ale, wine, and liquor, for consumption on the premises. The sale of food frequently accounts for a substantial portion of the receipts of these establishments.

Industry Snapshot

In 2007, the drinking establishments primarily engaged in the retail sale of alcoholic drinks numbered 56,829, according to Dun & Bradstreet, which generated approximately $15.56 billion in sales, with the average establishment accounting for about $300,000. States representing the majority of drinking places were: California with 4,409; Wisconsin with 4,183; Texas with 3,936; New York with 3,741; Pennsylvania with 3,458; Illinois with 3,404; Florida with 3,023; and Ohio with 2,940. Other significant states included Michigan, New Jersey, Louisiana, Indiana, Iowa, Minnesota, and Washington.

The drinking establishment industry--also knows as the bar and tavern industry--dates back to colonial America, which adopted the concept of a roadhouse tavern as a gathering place. The industry, however, is changing rapidly and may not exist in its traditional form. By the late 1980s, some consultants and bar owners were predicting that the corner bar, which sells nothing but alcohol, was heading toward its demise. By way of adaptation, bars and lounges, which serve food and even emphasize the sales of food items over alcoholic beverages have been gaining in popularity relative to establishments that sell beer, wine, and cocktails exclusively. An increased emphasis on drunk driving also affected the way bars and taverns marketed themselves by the late 2000s.

Organization and Structure

A profile of the bar and tavern industry in terms of what percentage of the market is represented by larger concerns, such as major hotel lounges versus independently owned taverns, doesn't exist. However, the leading trade association of licensed servers of alcoholic beverages--the American Beverage Licensees--boasted 20,000 members throughout the 1990s and that number remained steady through the mid 2000s.

Most eating and drinking establishments are small, independent operations. In fact, in 2007, nearly 86 percent of all establishments employed fewer than 10 employees. The small neighborhood bar, the sports bar with menu, the brew pub, and the hotel lounge are generally spread throughout urban and suburban centers in the United States. While they may differentiate themselves in image, ambiance, and type of product served (some, for instance, serve only beer), they often coexist in close proximity to one another. Many have live entertainment, such as music, or associations with celebrities, such as sports bars bearing the name of their athlete-owner.

Background and Development

The use of fermented beverages in celebratory rituals and social gatherings has been documented in many parts of the world throughout its history. The public roadhouse was developed by the Romans in the first century A.D. as they built their infrastructure of paved roads. The word pub, in fact, is shortened from "public house," a stopping place for the traveler to rest both himself and his horse. In the fifth century, Europeans fostered winemaking. In addition, in the tenth century an Arab physician is believed to have discovered the distillation process (for medicinal purposes).

The tavern, or pub, was an important aspect of English culture and was adopted by colonial America. Rum was prevalent at social occasions in early America, as were corn whiskey and hard cider. Tavern patrons were often entertained by performers, including ventriloquists, dancers, and musicians. The pub was also a place where the day's news was spread, as locals listened to travelers passing through from other places. This dissemination of news made the tavern a natural place for the establishment of local post offices.

The tavern owner was considered responsible for contributing to the town's orderliness. Licenses for serving alcoholic beverages dated back to 1672, and they were subject to suspension or revocation for sales to minors, slaves, servants, or intoxicated adults. Throughout the 1600s and 1700s, wine and malt liquors, as well as hard liquor or spirits, were sold. Rum was imported from the West Indies and had begun to eclipse the popularity of hard cider by the early 1700s. The colonies traded fish, tobacco, cotton, and lumber for rum and for molasses, which was then distilled in New England as rum.

England's Molasses Act of 1733 levied a duty on products imported into the colonies. This legislation provided an impetus for independence from England. Numerous historical figures in pre- and post-Revolutionary America that were tavern owners or sons of owners included Samuel Adams, Ethan Allen, William Penn, and Abraham Lincoln.

Prohibition caused the tavern to be replaced by "speakeasies"--illegal establishments where liquor was plentiful to those who provided the correct password. Organized crime gained its foothold in America during this period, as bootlegging flourished and dealers in whiskey and other liquors protected their market with weapons. Following the repeal of the Prohibition Act thirteen years after its passage, the neighborhood tavern reemerged.

Americans were increasingly doubting the healthiness of alcohol consumption in the early and mid-1990s. Medical research linked high alcohol consumption to liver cancer and other degenerative diseases. Smokers who also drink alcohol were found to have 13 times the risk of developing lung cancer as those who neither smoke nor drink. Although some research had found that widespread consumption of wine with dinner in France was responsible for their lower levels of heart disease compared with that of Americans, a 1993 study contradicted that finding. The more recent study concluded that the relative health of the French was due not to their wine consumption, but to their love of vegetables.

The bar and tavern industry has been heavily impacted by the steadily declining consumption of distilled liquor in recent decades. One bar owner in San Francisco described the environment in the late 1980s as "neo-prohibitionist." In an article in New York Times in 1989, Gerry E. Murphy, then executive director of the then-National Licensed Beverage Association (NLBA), said, "The day of the old bar which just served alcoholic beverages is past." Indeed, the U.S. Industrial Outlook predicted that "Domestic consumption of, and spending for, alcoholic beverages will probably continue to decline, leveling off toward the end of the 1990s."

In the early to mid-1990s, the eating and drinking places industry as a whole was growing at a steady rate, averaging about five percent increase in overall sales per year. By contrast, sales from bars and taverns (including both alcohol and food receipts) were flat and in some years actually fell. According to the National Restaurant Association (NRA), for example, sales at such establishments fell from $9.4 billion in 1991 to $9.3 billion in 1993, rebounded to $10.9 billion by 1995 but then fell again to $9.4 billion in 1996 (the latter a drop of nearly 14 percent). The NRA expected 2000 sales of about $12 billion, an increase due in large part to the rising popularity of sports bars.

Americans' growing emphasis on healthy eating and healthy living is the primary reason for the slow growth in this category. Self-help programs designed to help people identify and end addiction to alcohol flourished throughout the 1970s and 1980s. Moreover, those who drink alcohol in moderation have become more conscious of caloric measure and the nutritive value of food and drink consumed. In addition, Americans became more disapproving of driving while intoxicated, and groups such as Mothers Against Drunk Drivers (MADD) have gained political and social clout. Rising litigation over the responsibility of drinking establishments for the alcohol consumption of patrons also acted as a force toward lower purchases of alcoholic drinks. The overall effect of this shift in thinking is that the line is blurring between full-service restaurants which serve alcohol and bars and taverns that offer full lunch and dinner menus.

This grim outlook for the alcohol industry as a whole did not portend well for the bar and tavern industry. Many hotel lounges were transformed into combination eating/drinking establishments, or eliminated altogether to be replaced by meeting rooms. Although alcohol items have higher profit margins than food items, food was increasingly being emphasized more than drinks. Renewed interest in wine, martini bars, and sports bars helped stave off a continued decline at the end of the century, stopping the sales slippage with 2000 totals of $11.9 billion.

While the overall cause in this threat to the industry is the nationwide trend toward healthier living, the signposts of this shift are many. There has been, for the past several decades, a growing acceptance for the nondrinker in social settings. This has occurred in large part because of the widespread recognition of the physical and emotional health problems created by alcohol addiction. The Alcoholics Anonymous (AA) program, begun in the early 1900s by Bill Wilson and others, was created to combat the problem of alcoholism through meetings of individuals who identify themselves as having an addiction to alcohol. The number of people who have ended their consumption altogether through this mutual support program is unknown, but is believed to be in the millions. Although people who wished to abstain from alcohol consumption felt social pressure to drink at parties and public gatherings, the stigma associated with "teetotaling" faded until it was almost nonexistent in the 1990s. MADD gained political influence and helped create a stigma surrounding driving an automobile while intoxicated. In addition, several key civil actions brought by victims of auto collisions and their families resulted in increased liability of alcohol servers for intoxicated patrons that leave establishments and cause accidents.

The response of the bar and tavern industry to the liability issue was the education of its workforce about this challenge. A program sponsored by the American Beverage Licensees (ABL)--formed by the merger of the NLBA and National Association of Beverage Retailers (NABR) in 2002--called Techniques of Alcohol Management (TAM) certifies bartenders and other alcohol servers in methods of curtailing the problem. The program teaches employees of taverns to identify signs of intoxication in patrons, the effect of food consumption on the rate of intoxication, how to discreetly regulate a customer's consumption, and the application of state and local laws to the sale of alcoholic beverages. A similar program is called Training for Intervention ProcedureS (TIPS).

Several different pieces of federal legislation either hampered the industry or threatened it in the 1990s. President Clinton signed a bill that reduced the business meals and entertainment tax deduction from 80 percent to 50 percent in 1993. The industry immediately began lobbying for repeal of that legislation through separate bills introduced in both the Senate and House of representatives.

A bill under consideration in 1999 included a provision to lower the national blood-alcohol content (BAC) level defining intoxication from .10 to .08. The then-NLBA opposed this measure on the basis that, of those intoxicated drivers who were killed in auto accidents, 81 percent had a BAC higher than the legal limit of .10. However, several states, including California, had already lowered the BAC to .08 while national legislation was still being considered. By the mid-2000s all states had adopted the lower limit.

While opposing legislation that was perceived to be harmful to the industry, bar and tavern owners fought back by courting consumers. The rise of sports bars in the 1980s provided an example of industry adaptation to consumer health concerns. In contrast to the dark, smoke-filled bar of past decades, sports bars are lighter, with an updated, high-energy ambiance. The vast majority of such bars, in addition to having televisions for their customers to view, serve full menus of lunch and dinner items. These types of establishment stress a casual atmosphere and efficient but unobtrusive service so that patrons may meet to watch an athletic event and enjoy gathering with friends. Sports bars also target women and families, often tailoring their menu to include light, healthy food in addition to burgers and other American fare. The celebrity element is another prominent characteristic of sports bars. Many are owned by, or named after, athletes, and rely on visits by athletes to publicize and promote the establishment.

Another successful concept of the 1990s has been the brew pub. Although this is a borderline category since many brew pubs derive more than half of their sales from the food they serve, the brew pub--and microbrewer beer generally--has helped to revive both a beer industry on the decline and the drinking places industry itself. According to Michelle Dorfman, writing in ID: The Voice of Foodservice Distribution, "brew pubs, by definition, have an on-site brewery and more than 50 percent of the brew product is consumed on-premise." After gaining initial popularity early in the 1990s, the category has since exploded with more than 500 brew pubs nationwide by late 1996.

Posher alternatives that catered to popular fads such as swing dancing, martini bars became more prevalent and helped rejuvenate the industry. Industry entrepreneurs also embraced the cigar fad of the 1990s, and began to allow their patrons to smoke cigars on-site or created specialty cigar bars that sold a variety of cigars in addition to selling alcoholic beverages. Such innovations were signs that the industry would keep reinventing itself despite all the negative trends.

The National Restaurant Association (NRA) projected 2008 sales of $16.5 billion for drinking places, accounting for 3.2 percent of commercial restaurant establishments.

While the distilled spirits industry has been lucrative, Federal and state excise taxes play a significant role in the industry. In 2005, The National Center for Policy Analysis (NCPA) reported that thirteen states sought increases in taxes and related fees on alcoholic beverages. Further, taxes on distilled spirits were about $0.21 per ounce of alcohol. According to the Distilled Spirits Council (DSC) of the United States, "distilled spirits are one of the most heavily taxed consumer products in the United States. More than half of the price that consumers spend on a typical bottle of distilled spirits goes toward a tax of some kind." The resulting effect on the entire hospitality industry is wide-reaching, as the DSC goes on to say "When beverage alcohol taxes are increased, it creates a devastating ripple effect on jobs throughout the entire hospitality industry."

Despite the excise tax, the U.S. Department of Commerce reported that adjusted alcohol sales were up 5.2 percent to nearly $9.2 billion in June of 2008 over the same period a year earlier. Also, according to the NCPA, the total amount of Federal excise tax collected from the distilled spirits category for 2006 was $4.4 billion, from the beer category for $3.6 billion, from the wine category for $800 million. Additionally, state taxes during that same time reached nearly $5 billion.

Current Conditions

When the U.S. economy entered a recession in the late 2000s, it took most industries along for the ride. Unemployment jumped to over 10 percent, a credit crisis ensued, the housing market collapsed, and many industries suffered significant losses as consumers stopped spending. Bars and taverns, however, were one of the few industries that were working hard to hold steady during the rough economic period, catering to people's need to find comfort and companionship during the uncertain times. The business environment was, however, extremely challenging, and many establishments that could not compete closed their doors. In addition, the business environment changed. Top shelf spirits, commonly ordered during times of prosperity, were replaced with more orders for cheaper selections as well as beer, which had been losing ground to distilled spirits over the previous years. During 2010 top brands began to make a comeback, albeit slowly, as the economy showed signs of recovery.

The largest issue for many bars and taverns was the increasing push in to ban smoking within all establishments that serve food. Such ordinances were being enacted on a state-by-state and city-by-city basis across the nation during the late 2000s and early Whereas those states and cities that have enacted a smoking ban in bars and taverns report improved air quality within the establishments, tavern owners are commonly uneasy about the effects the ban has on their business. "People who don't smoke appreciate it, obviously," Ryan Schultz, a Wisconsin bar owner told the Wausau Daily Herald regarding the air quality shortly after his state enacted a statewide ban on smoking in bars and restaurants. "But there's also the other side of that. People who do smoke get ornery about not being able to smoke after a meal."

Some advocates have argued that a smoking ban has a negative economy effect of smoking bans on bars. For example, one year after a smoking ban took effect for Pennsylvania's bars and taverns (along with most other public gather places), Amy Christie of the Pennsylvania Tavern Association noted that the state's number of taverns had dropped, falling from 16,000 to 12,500 in six years. She blamed much of the decline on the smoking ban. Critics challenged this view, claiming that the weak economy was much more likely the culprit. In fact, a 2010 study of Washington State's 2005 ban of smoking in bar found that the ban had a positive economic impact on the industry.

Of the total 58,829 establishments in 2009, 20.2 percent were classified broadly as drinking places, which accounted for 11,502 establishments and $4.1 billion in 2009 revenues. Of the 71.7 percent of places classified as bars and lounges, 6.2 percent fell under the general classification with 3,523 firms and $858.9 million 2009 revenues; 31.2 percent were classified as taverns with 17,732 establishments$3.7 billion in 2009 revenues; 20.4 percent were classified as bars with 11,569 establishments and $3.11 billion in 2009 revenues; 11.6 were classified as cocktail lounges with 6,599 establishments and $1.61 billion in revenues. Smaller portions of this segment were made up of saloons, beer gardens, and wine bars. Finally, night clubs, cabarets, and discotheques combined for an 8 percent market share, or 4,541 establishments, and combined 2009 revenues of $1.89 billion.

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News and information about Drinking Places

Food Services and Drinking Places
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Sources Sought:Food Services and Drinking Places Archiving Policy: Automatic, 15 days after response...Code: Subsistence NAICS Code: Food services and drinking places/ food service contractors Response Date: Dec 14...
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States News Service; August 14, 2017; 700+ words
...percent in food services and drinking places in 2016. Productivity increased...3 Special food services12.4 Drinking places, alcoholic beverages1.4 Restaurants...unchanged. In food services and drinking places, productivity rose 1.3 percent...
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The Spokesman-Review (Spokane, WA); November 30, 2017; 700+ words
As you might expect at 6 p.m. on a Monday, the televisions at The Hub Tavern on North Monroe were tuned to "Monday Night Football" - well, except for one TV tucked in a corner at the end of the long bar."That's the hockey TV," explained owner Dave Richardson.When he and his family bought The Hub
Productivity Up in Wholesale Trade, Retail Trade, and Food Services and Drinking Places in 2015
States News Service; August 26, 2016; 700+ words
...retail trade, and 1.8 percent in food services and drinking places in 2015. Unit labor costs, which reflect the total...drinking places1.8 Special food services-1.9 Drinking places, alcoholic beverages-1.5 Restaurants and other...
Productivity and Costs by Industry: Wholesale Trade, Retail Trade, and Food Services and Drinking Places Industries, 2014
US Fed News Service, Including US State News; August 6, 2015; 700+ words
...percent in food services and drinking places in 2014, the U.S. Bureau...increase in food services and drinking places in 2014 resulted from an increase...industries.In food services and drinking places, productivity rose 0.3 percent...
Eating & Drinking Places Sales Growth Outpacing Retailers
The Food Institute Report; August 24, 2015; 700+ words
...sales came through eating and drinking places through the first half of 2015...Census Bureau data) EATING & DRINKING PLACES: % Millions: 2015 2014 Chge...JAN-DEC * $248,022 -- DRINKING PLACES % Millions: 2015 2014 Chge...
Eating & Drinking Places Continue to See Sharp Gains
The Food Institute Report; May 25, 2015; 700+ words
...at the nation's eating and drinking places increased just shy of 10...VS. 2014 Millions: EATING & DRINKING PLACES: 2015 2014 % Chge. JAN $47...226,580 -62.1% Millions: DRINKING PLACES 2015 2014 % Chge. JAN $1...
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The Food Institute Report; April 7, 2014; 603 words
...the prior year. For eating and drinking places, the news is not nearly as positive...grocery stores and eating and drinking places are preliminary and subject to...grocery stores or eating and drinking places as reported by the BUREAU OF...

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