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Following the release of Constellation Brand's 1Q09 earnings, a Wall Street Journal article cited comments made by a vice president of the company that as a result of tougher economic times, consumers are changing their drinking habits by drinking less in restaurants and bars and more at home. This decreased alcohol consumption at restaurants will hurt casual dining operators as alcohol is typically a high-margin menu item that raises companies' average checks.

Specifically McCormick & Schmick's said on its 1Q08 conference call that its beverage sales had fallen 4.5% YOY on a comparable basis, which they indicated was a small decrease relative to a more significant decrease in on-premise liquor consumption in the broader economy. Alcohol sales, predominantly from the company's bar, represented about 28% of MSSR's 2007 sales and contributed higher gross margins than food sales.

Morton's, which generated about 29% of its 2007 sales from alcoholic beverages, however, stated that it has not seen any discernible changes in its beverage check, which is a good sign as the company is betting on continued strong off-premise consumption with 44% of its restaurants now outfitted to include its Bar 12-21. Additionally, all new restaurants will be built with the Bar 12-21.

Liquor sales are a significant contributor to the overall profitably of most casual dining restaurants. On top of everything else, the last thing the industry needs is declining liquor sales.