David Flaherty has more than 20 years experience in the hospitality industry and is the marketing director for the Washington State Wine Commission. This article does not necessarily reflect the opinions of the editors or management of Nation’s Restaurant News.
Beverage sales are one of the most lucrative revenue-generators for any restaurant.
A well-managed wine program in particular can mean the difference between financial success and failure. Like driving a fine-tuned Ferrari, mastering the wine list is a skill that takes years to develop and decades to master. For those who can present a wine selection that is accessible, adjusts to guests’ desires, mirrors what the chef is doing on the plate and meets financial goals, success means job stability.
Many wine programs may seem esoteric or daunting at first glance, but good ones offer value to patrons and excitement for the staff, and create a consistent and reliable revenue source
“In general terms, 30 percent of the business could, and should, come from alcohol. The high margins can generate significant bottom-line dollars,” said Colin Thoreen, wine director at Ai Fiori in New York City. “If you consider larger wine programs that draw over $1 million a year, and that have a cost of 30 percent, they are dropping $700,000 to the bottom line.”
Thoreen has been running the wine program with nearly 1,500 selections for five years. His advice? “Once you have a solid idea of the mission statement, stick with it and find wines that fit your goals instead of allowing distributors to push their agenda on you.”
Understanding your clientele is essential. Are they locals? Tourists? Business people dining on expense accounts? That information, along with your goals, need to be rolled up in offerings that also pair beautifully with the food.
“If your list does not fit your cuisine, or is managed by someone who doesn't have insight into what people want to drink in that particular establishment, you’re losing opportunities to sell,” said Amanda Reed, beverage director at Heartwood Provisions in Seattle.
Reed diligently watches which wines sell and what type of selections her guests are asking for, and that informs her buying.
“I've observed wine directors and sommeliers that create lists that reflect their personal tastes, but not necessarily their guests’ tastes,” Reed said. “It's important to keep the list well rounded, so there is something for everyone. And I’m fortunate to work in a place that is a little more experimental as far as food and concept go, so people come in craving an adventure. That gives me some flexibility when it comes to off-the-beaten-path selections.”
Smart wine pricing is both a science and an art.
“The industry, in general, has a three-time markup on wines,” Thoreen said. “But additionally, I make sure there are ‘Easter eggs’ in every single section of the wine list that are just above cost, as this rewards the wine-savvy who appreciate and/or understand wine. And for a bottle of wine meant to impress, I may price those at an even higher markup.
“For wines or regions that I personally love, those are some of my lowest markups, as I want people to take a chance on them,” he added.
For the by-the-glass offerings, where much of the volume happens, great care needs to be taken with pricing.
“Most wines by the glass are priced in line with the bottle cost,” Reed said. “So a $10 bottle at cost will be offered for $10 a glass.”
However, if a wine Reed wants to sell by the glass costs more than $20, she’ll decrease the markup percentage to help it move.
Thoreen agreed that operators need to pay attention to the math when offering wines by the glass.
“This category should make up at least 20 percent of your overall wines sales and run a cost of or below 23 percent,” he said. “You will not have a successful program, and ultimately business, if you can’t achieve this.”
Negotiating with distributors is also a needed skill, for there are often deals to be had by buying in larger quantity or guaranteeing the wine will be featured on the by-the-glass list for a set period of time.
Reed has found the most success on her by-the-glass wine sales by listing the grape variety next to the wine to help customers understand their options.
Thoreen said it’s important to remember that the wine list is not about you.
“I think the biggest surprise for most, and one that is often overlooked, is the need to get out of your own way,” he said. “It’s not about your personal preferences; it’s about what the clients are demanding, and the sustainability of the business.”
“Don't splurge on wines that don't move,” she said. “Even if they are iconic and fun to represent on your list, they don't always have a place in your restaurant.”
Lastly, and perhaps most importantly, a successful wine director will ensure their staff is well versed in the layout of the list and its focus.
“Train, train, train,” Thoreen said. “Training your staff is the lynchpin of a successful program, and getting them excited is so important. Clients appreciate staff that are confident in what they are selling, so I encourage monthly classes that give them a foundation of wine and spirits to pull from.”
David Flaherty has more than 20 years experience in the hospitality industry. He is a certified cicerone and a former operations manager and beer and spirits director for Hearth restaurant and the Terroir wine bars in New York City. He is currently marketing director for the Washington State Wine Commission and writes about wine, beer and spirits in his blog, Grapes and Grains.