How Will Legal Weed & Recreational Marijuana Impact Restaurants?

By: Jackie Sabol

6 Minute Read

Apr 03, 2018

Foliage 1157792 1920 Min 943908 Edited

marijuana restaurants

With more states legalizing the use of recreational marijuana (eight so far, at the time of this post), consumer dining habits are likely to change, leaving food service operators with the challenge of staying ahead of the evolving needs of their customers.

There are two sides of this coin: On one side, there are real fears of a huge industry shift. On the other, there is enormous opportunity.

The Downside of Legal Weed for Restaurants

Alcohol Sales

One of the biggest fears for bar and restaurant owners is a drop in alcohol sales. Since the profit margin on booze tends to be around 70-80%, it’s easy to see why this is such a sticking point.

Without the ability to sell marijuana in most restaurants, some operators fear customers will go one way or the other - weed or drinks. Bloomberg tells the story of two Denver chefs, Bryan Dayton of Oak at Fourteenth and Jennifer Jasinski of Euclid Hall, who experienced a 2%-4% decline in alcohol sales since recreational marijuana was legalized.

Another restaurateur in the same article stated he was feeling a similar trend, as were his distributors. His liquor sales dropped by about 2%, roughly $100,000.

Labor Struggles

In the Bloomberg article, chefs also mention the added weight tacked on to the burden of finding labor - as if that wasn't tough enough for restaurants.

“Colorado’s restaurant labor market is in Defcon 5 right now, because of weed facilities,” said Bobby Stuckey, the James Beard award winning co-owner of Frasca Food and Wine in Boulder and the soon-to-open Tavernetta in Denver.

In some states, dispensaries and grow centers offer higher wages and full benefits. The high stress and lower pay at restaurants can make employment at a grow center look very appealing for restaurant industry staff.

This all depends on where you’re working, though, because not all regions pay well. In Washington and Colorado, the article points out, wages were as high as $20-$22 per hour, while Oregonlive.com states that the salary for the same jobs can be as low as $21,000 - just over $10 per hour.

Areas of Opportunity

Weed and Alcohol Can Co-Exist

The Bellingham Herald revealed an encouraging trend: 2016 was the first year that marijuana sales actually surpassed hard alcohol sales – but alcohol sales also rose, indicating that weed and booze are not mutually exclusive. So while this includes alcohol sales across the board, not specifically restaurants, it’s great to see that the general population is not choosing one over the other.

pot vs. booze

Go Where the Money is

There is another factor that adds additional pressure to the restaurant industry to embrace marijuana culture where the plant is legal for fun, and that issue is cash. San Diego Magazine points out that many private investors in the local area are funneling money into marijuana, away from the restaurant world.

As opportunities for investor ROI shift, it's likely the money will be headed in the direction of restaurants that are excited by this legal and social movement, not frightened by it.

Menu Innovation

As trends lean towards a world where marijuana is as common as alcohol, restaurants are coming up with new ways to incorporate this up-and-coming “ingredient” into their brand. It’s slowly becoming legal to use marijuana at restaurants, so it’s likely just a matter of time until it’s widely sold and used in dishes/drinks.

In 2014, Unique Pizza and Subs in Colorado announced its intention to sell pizza with cannibas-infused sauce to bars and nightclubs. The same trend found its way to Massachusetts shortly after the state made the move to legalize.

The demand is here - time to get creative in your menu engineering!

Cater to Your Audience

People who smoke marijuana are often associated with big appetites - and it turns out that's not just a generalization. Just ask Peyton Manning, who bought 21 Colorado Papa John's franchises shortly before the statewide legalization of weed. The move turned out to be wise and well-timed, as sales in these stores have increased up to 25%.

Nationwide - even where recreational use isn't legal - restaurants still see spillover sales from marijuana. On 4/20 (or the unofficial "Weed Day"), restaurant sales increase up to 92% depending on the concept.

If you're in a state with recreational marijuana use, reaching this audience with munchie-friendly food is almost a guaranteed way to increase your restaurant's sales.

Conclusion

So what does recreational marijuana mean for restaurants?

  • A shift in customer behavior and needs.
  • The need to think outside the box with regards to current regulations and laws.
  • Finding new ways to accommodate these changing needs.
  • The race to be the restaurant in the neighborhood that is embracing cultural changes.

In the restaurant world, this mindset is nothing new – and since foodservice operators are among the most resourceful, agile, creative folks who are strongly connected to their customer base, we can assume this trend will be taken in stride and capitalized on in some very interesting ways.

What are these interesting ways? More creative menu engineering to capitalize on the larger demand for restaurant food. From $200, four-course dinner with marijuana pairings under the stars in Colorado to L.A.’s subculture of marijuana pop-ups, marijuana is likely going to be the next big foodie trend.

How do you think the restaurant industry will shift as marijuana becomes widely legal?
Let us know in the comments below!

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DISCLAIMER: All of the information contained on this site (the “Content”) is provided for informational purposes only and not for the purpose of providing legal, accounting, tax, career or other professional advice. The Content is provided “as-is” without any warranty of any kind express or implied, including without limitation any warranty as to the accuracy, quality, timeliness, or completeness of the Content, or fitness for a particular purpose; Toast assumes no liability for your use of, or reference to the Content. By accessing this site, you acknowledge and agree that: (a) there may be delays in updating, omissions, or inaccuracies in the Content, (b) the Content should not be relied upon or used as a substitute for consultation with professional legal advisors, (c) you should not perform any act or make any omission on the basis of any Content without first seeking appropriate legal or professional advice on the particular facts or circumstances at issue and (d) you are solely responsible for your compliance with all applicable laws. If you do not agree with these terms you may not access or use the site or Content.