Thursday, January 1, 2009

Restaurant Wine

Terry post:

Let me spend a few lines and discuss the strategy that most restaurants follow when it comes to selling wine.

  1. Restaurants typically sell wine at a 150% to 200% mark up. At first blush, that seems like a huge mark-up, but in reality it isn't that much higher than you'd pay at a wine shop or grocery store. My observation is that a typical wine shop will sell at 100% to 135% mark-up with a grocery store in the 135% to 150% range. In the restaurant business there are additional costs in maintaining an "on site" wine/beer license and the cost of replacing wine glasses which are broken by customers (rarely) and diswashers (often). This means that a bottle of wine that wholesales for $10 will sell for $25 to $30 at a restaurant.
  2. When at a casual dining restaurant buy among the MOST EXPENSIVE wine on the list. And, when at a fine dining restaurant buy among the LEAST EXPENSIVE wine on the list. Speaking from personal experience, I put over 75% of my time selecting wines in the $30 and under category (which for my restaurant is LEAST EXPENSIVE). The reason is simple, we average an $80 per-person ticket and individuals who will pay for fine dining will pay for fine wine. And selecting great wines in the $80 - $150 range is pretty simple: it is less simple finding a good wine at a lower price for those customers who wish to buy in that category. The inverse is true at casual dining restaurants: most diners expect to find low-priced wines, but a few will desire something special. Market segmentation demands that you have product to meet the average diner as well as the exceptional diner.
  3. Be careful of wine "specials". A restaurant will sometimes sell an over-aged wine at a discount to get it off of the books. In the past month I have seen two specials where California Chardonnay from the 2002 vintage was a "special" - the 2002's are getting long in the tooth and are likely past their prime.

~ Terry

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