Free drinks, the high-tech way

Phone in hand at a bar with a beer
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For a barfly, there's nothing sweeter than a round on the house. But if you've yet to become "a regular," there's a new type of app that will make your drinking habit more affordable.

Hooch is a subscription-based app that lets users redeem one free drink a day at participating bars for $99 a year or $9.99 a month. Each day, starting in the morning, users get their first drink free at a venue of their choice, plucked from a list of more than 50 hot spots in New York and Los Angeles.

Young urban professionals (age 25 to 34) often have the freedom and desire to try new, exciting bars, but may hesitate to foot the booze bill up front, Hooch CEO Lin Dai said.

"Someone with their first big, exciting job in a big city in New York or LA is our brand ambassador," Dai said.

But with a preset selection of free drinks to whet their palates, parties that use Hooch rack up an average tab of $30 to $40 at bars and over $100 at restaurants, making the first round a worthwhile loss-leader for the venue, Dai said.

Bars don't get reimbursed for the free drinks they offer through Hooch, but Dai said the exclusivity of their listings serves as free marketing for the venues, which must pass through a rigorous vetting process to make it on the app.

Plus, fancy cocktails have always tended toward significant markups, historically giving bartenders the option to dote on their favorite customers, Dai said.

Subscribing to the night life is a model that appears to be taking off, as competing apps also gain traction. Hooch expands to Austin, Texas, on Friday, with Dallas, Miami, San Francisco and Hong Kong upcoming.

Frink is a similar app, launched in November in Hoboken, New Jersey, that offers one free beer, wine or basic mixed drink a day for $5 per month, according to its website. And FullGlass, launched four months ago, offers buy one, get one drinks for $10 a month at 75 New York City locations.

"Going to our awesome partner venues, you are able to save tremendously," said Ilya Zatulovskiy, co-founder and CEO of FullGlass. "But it's not really about saving, it's about finding new places. We don't want to be a discount club or coupon book. It's about knowing the bartender, being the VIP. You're the insider."

To be sure, these apps are nascent and small. Hooch has about $1 million in funding and about 10,000 sign-ups so far, despite ambitious plans to reach millions of users. FullGlass has about a 10 percent conversion rate from its free trial.

Plus, there are regulatory challenges, Zatulovskiy said, because each state has its own laws about whether liquor can be discounted or given away.

But Hooch and other apps come at a time when the local dive bar is being forced to innovate, facing disruption from multiple avenues.

Though spirit sales remain high, the number of neighborhood bars across the U.S. has contracted over the past 10 years, as rising rents, chain dining, craft breweries, and even alcohol home delivery services edge out corner pubs, according to The Associated Press.

Dai said it's not his goal to disrupt the age-old idea of a round of drinks on the house, but rather, to offer a superior way to serve drinks, attract new customers and harness big data to track demographic drinking habits.

"Because we limit the drink choices, there's a lot of data that didn't exist before," Dai said. "So it's a huge business we are building for our spirit and beverage partners."

But like gyms and taxis have had to change as apps disrupt their industries, tipplers, too, may start to make their happy hour choices online, said Zatulovskiy.

"We certainly hope the way people decide is the mobile apps," Zatulovskiy said.