Just generally curious about this topic because after researching a bit I haven't been able to locate a solid resource on this. I want to know the business side of wine lists a bit more. I studied business in college, but not in relation to wine. I understand contribution margins, COGS, etc, but I'm interested in how to price and how to decide how the wine list will perform.
Any resources or help would be appreciated!
Well for most major markets Restaurant (DC, Boston, San Fran) the industry norm is a basic mark up system. For wines by the glass you mark up 4X if a buy a bottle for 10 a bottle I ask 10 for a 6oz glass so I pay for the bottle with the first sale. For most by the bottle wine its a 3X mark up, if I buy for 50 I ask 150. This scale works most of the time. As you get more and more expensive wines you usually decrees the markup a bit, especially if the wine isnt that hard to get IE Dom Perignon pricey but not hard to get even in large amounts so I only mark up x2. If a wine is expensive and very hard to get IE Screaming Eagle Cab I can only get 3 bottles a year I will stick to the 3x markup or sometimes even more because I dont really want to sell it to fast as it looks good on the list. Every business has a different model, Im sure someone with alot of corporate wine experience will be able to provide you with a more scientific way of doing this. If I was looking to price a list in a city I didnt know well I would get a few copys of wine lists from places in the same food style and price point as the restaurant I ws working with and see what they asked for wines and then look up the cost if those wines, I think you will find many stick with the 4x 3x system. Cheaper prices dont always mean better sales, I now work for a restaurant with a huge library of older wines, We have many many cases of a wine I wanted to sell off as it was getting a bit too old, it was still drinking great but I didnt want to keep it for a long time, The price had been 155.00 a bottle so I dropped it to 99.00 it didnt sell very well, When I asked a few of my better clients why they hadent taken advantage of the savings and they said "at that price I assumed there was something wrong with it"..LOL go figure.
If you haven't read this, we shared some thoughts on wine list pricing.
Awesome! Haven't read this.
After reading this, do you have any other advice, Geoff?
As a customer, I am a big fan of tiered pricing. While I’m more than happy to pay $45 for a $15 bottle, I would never spend $450 on a $150 bottle. I prefer to look at how much profit in dollars you can generate from the bottle rather than a percentage; you can’t put a percentage in your pocket.
Caveat: every business model is unique and I would never say that my approach is right for every wine program.
This makes a lot of sense. How do you feel BTG programs should be run. Although,you just stated every business is unique, is there any loose rules or guidelines one could follow?
Don't hesitate to make money on a BTG program. People need to pay for their seat in your restaurant. A typical approach is to charge your cost of the bottle for a 5-6oz pour. For glasses that are say $15 and above, I would consider scaling down that type of markup. I am also a fan of a small selection of wines by the glass; focus them. Fewer choices mean fresher wines and less waste.
This thread reminded me, so. just checking....is there an ETA for The Business of the Sommelier Study Guide yet :)
Thanks for checking in, Paige - keeping us honest ;) We expect to publish it in October.
Not a study guide but the "bar management" podcast from guildsomm is amazing!
Edit: It's the "Wine Program Management" podcast.
Thank you for the quick response!
Really looking forward to it :)
In line with the decreasing margin as wholesale price increases, I realized years ago that, if you do this at thresholds, you'll end up with an oddly priced list. After all, if, for instance, you go from 3x to 2.5x at, say $75 your cost, than a bottle of wine you spend $73 is going to cost more on your list than one that you pay $76 for. To remedy this, I actually sat down with my old HS math teacher and created a logarithm where you enter in two points (what you mark up your cheapest wines and what you mark up your most expensive wines and it returns the suggested mark up given a wholesale price. It's an excel doc that I'd be happy to share.
Mind you, this price is just a suggestion and one should always adjust to what the market will bear or other considerations like David's Screaming Eagle example. There are plenty of wines that I get more aggressive with my mark-up than I normally do given the cost because they'll sell anyway and others that I simply won't move at all if I try to get my expected mark-up. These, of course, balance out.
I would be really interested to see this in action!
Can someone who is less of a Luddite than I tell me how to drop it into this thread?
Hi Charlie! If you click "Full Editor" under a new reply, a larger comment box will appear, and you can just drop an image or file into the text box to share it. Alternately, you can add an image/file by clicking "Insert" in the top navigation. If this is in doc form, I'd recommend saving it as a PDF first. Let me know if this doesn't give you the option you need!
This thread turned out to be a gold mine! Thanks, Charlie.
If you could send me that excel doc that would be amazing :D