Margarita Flight
The margarita flight at Woodys Macayo in Phoenix.
By Elyse Glickman
Even in this era of craft cocktails, the Margarita—as integral to Mexican dining as tortilla chips and salsa—continues to rule at the bar. But the rules for profitability on this enduring classic are changing.
Even as craft cocktails make their way onto bar menus, customers have not lost their taste for the perfect fusion of agave, citrus, sweetness and salt. And while a customer does not often order two entrees, there’s an excellent chance he or she will order at least a second Margarita!
Mexican restaurants are tapping into consumers’ thirst for Margaritas by offering myriad ways to order the cocktail in multiples: blended or on-the-rocks, fruit flavored, “skinny” and “Cadillac” among them. But as cocktail recipes have become more sophisticated, so, too, have decisions about how to price the various members of the Margarita family.
“The Margarita is the perfect cocktail for a cost-benefit analysis because there are only a few ingredients in the first place, and therefore, just a few variables,” says Jay Schroeder, the new beverage director at Quiote in Chicago. “With the classic, you are not looking at using a lot of different expensive liqueurs, or multiple pieces of produce. At its core, it is a recipe for a cost-effective cocktail, and even when you are using the best expression of those ingredients, you will sell more margaritas than other cocktails on your menu. This is where many of your profits will come from.”
Yet experts acknowledge that the craft cocktail movement and the emergence of young, quality-savvy customers has changed the equation when it comes to cost. Karalee Fallert, owner of Taco Boy in Charleston, South Carolina, is one of those experts.
While Taco Boy offers a 10-oz. house Margarita for $8, Fallert has a vested interest in balancing “the message of value”with “less is more,” she explains.
“[I am] putting this into context with our competitors who offer 15- and 20-oz. Margaritas for a comparable price,” Fallert states. “However, our definition of value is having our customers feel our $8 margarita is the best they've ever had, and therefore, will have incentive to order more than one.”
Take the kind of customers looking for a Margarita served in a giant cowboy boot.
“They know there are places where they can get that, but they know they may not get [one made with] the best quality tequila,” Fallert says, “or they’ll get one made with a mix rather than fresh juices. They know our place is where to go when they want to know they’ve spent their money well.”
Mat Snapp, beverage director of Phoenix-based Fox Restaurant Concepts, echoes Fallert’s sentiment.
“I tell our bartenders that if you put [garbage] in, you get [garbage] out,” Snapp says when talking about the approach he uses at Blanco Tacos & Tequila in Phoenix and Scottsdale, (one of the restaurant brands in Fox Restaurant Concepts’ stable). “If your house sour starts with actual lime juice, you’re already miles ahead of the game. Recently, we added a little coconut water to give it texture, but a perfectly balanced house sour allows you to use a less expensive tequila if you need to. We pour Cuervo Especial Silver, a good solid silver tequila, and an orange liqueur that adds dimension and depth.”
Let’s Talk Tequila
While it is important to balance ingredient costs with quality, investing in a tequila several notches up from the budget brands will pay off in repeat orders, several bar pros say.
Schroeder suggests tasting the tequilas you are considering for your house Margarita. If the spirit tastes like heat and black pepper, that's what the drink is going to taste like; if it tastes like soft, sweet roasted agave with notes of citrus, those flavors will come through in the Margarita, he notes.
“If you are looking to step up the quality of your Margarita, the first thing you need to do is select a tequila made from 100 percent blue agave,” Schroeder says. “Doing this tells your customers they are getting what they're paying for.”
Schroeder also assesses which distilleries use more traditional tequila distilling methods—brick stone ovens for the agave roasting phase, for example—and avoids spirits made with a diffuser, which he calls “a more industrial piece of equipment that does nothing for the flavor of the spirit.
“While some guests won't know the difference in terms of the taste, ethics-wise customers will feel better about drinking a tequila made in a more honest way,” he adds.
Several Phoenix restaurants have taken that strategy even further.
“Rather than having a true house Margarita, we created a ‘Build Your Own Margarita’ section on our bar menu to allow guests to truly create their own, and price it out as they wish,” says Julean Waddell, assistant manager of Woody’s Macayo, the latest extension of the 70 year-old Macayo restaurant family. “The price points range from $8 to $10 and $12, depending on what tequila and liqueur is selected. Tequilas we use at the bar are brands the guests know, such as Azunia (which is organic), El Jimador's reposado and blanco, Herradura's portfolio, and Patron's portfolio.”
Meanwhile, The Spotted Donkey Cantina at Boulders Resort & Spa in Scottsdale, Arizona, is tapping into the exclusivity proposition via its 12 year-old Herradura Barrel program (its 13th barrel has been selected and is slated to pour as early as March 2018).
According to cantina manager Frank Schissel, the price differential between its $16 El Pedrigal Margarita and the basic $8 Margarita made with Sauza Silver and house-made mix is justified by offering customers the choice of a superior cocktail. “This starts with the exclusivity of this special Herradura, expressly made for us and only available at this restaurant,” Schissel says. “From there, we make sure the other ingredients for the El Pedrigal are the best we can get from our area. Other elements are crafted in-house to complement the flavors in the (special Herradura) tequila coming from the terroir.”
Managing the Mix
Schroeder says investing time and labor to make fresh mix is an important consideration since making your own can cost the same as buying mix pre-made. Although some managers in volume-focused bars may argue that convenience influences their preference for pre-made, Schroeder offers a surprisingly simple solution for high-volume establishments that fear making fresh mix is too time-consuming.
“One thing you can do is juice fresh limes, add sugar and water, and freeze the juice so it doesn't oxidize as quickly, and pull it out when you need to use it,” he says. “This creates a scenario where there is very little waste.”
There is one caveat to the fresh mix option this year.
As Fallert observes, 2017’s weather extremes and their impact on citrus crops in Florida may impact the cost of fruit needed to make fresh mix. In this situation, a bar’s main decision maker should start looking for sourcing alternatives to ensure as much consistency as possible.
“We may have to be more dynamic in terms of how we source our fruit to keep our value proposition intact,” she says. ”However, we will still keep track of the whole picture before we do a reprint of our menu to change the prices. We try to keep our margins as low as possible to be able to keep our price points and deal with the spikes.”
Pricing with a Purpose
And then there’s the loss leader people affectionately refer to as “happy hour.” Schroeder says that unless you plan to create a different Margarita special for happy hour, you should split the difference in what you'll make at happy hour vs. regular hours, and gauge the customer's expectations.
“One [chain] got flack recently for $1 margaritas that were heavy on sweet and sour and lighter on the tequila,” Schroeder says, noting that in cities like Chicago, a Margarita can be priced anywhere from $9 to $17, while the secondary market range runs $7 to $10. “With happy hour, you should make the same high-quality product, knowing the lower price and extra investment will ultimately result in higher sales and happier customers.”
Snapp has a cost formula for Blanco Tacos & Tequila’s Margarita, which is made full strength even during happy hour. “This means we will have at least two ounces of spirit per drink,” he explains. “We aim at a certain ‘cost of goods’ and engineer backwards. We know that our entry level tequila is around $10 per liter, and we know that [depending on lime prices] our house sour has a certain cost per ounce cost. If there are additional costs outside this, they are added to the menu price. We won’t stop using fresh lime juice no matter what, so we will argue for better costs or buy in larger quantities to pass the value along to the guest.”
In the end, after all, it’s the customer that matters most.
“You have to love your guests…it’s that simple,” Snapp concludes. “If you love them, you’ll make them a beautiful Margarita that makes you money and makes them happy. You charge them what you know they’ll feel comfortable paying, and you deliver them a Margarita they’ll want two of. The only compliment I ever need on a drink—Margarita or otherwise—is a smile and the sentence, ‘I’ll have another one of those!’”
Elyse Glickman in a Los Angeles-based freelance writer and el Restaurante’s regular At the Bar columnist.