On Your Markup!
Jeffery Lindenmuth - December 2008
Wine pros bare their strategies for boosting sales by uncorking value.
Peter Neptune, wine director for One Pico at Shutters Hotel on the Beach in Santa Monica, California, gauges value on his wine list using the "Clicquot index." The globally ubiquitous Veuve Clicquot Brut Yellow Label, which wholesales for about $42 a bottle, is typically marked up three times for restaurant pricing and four to five times in many hotel restaurants, like Shutters, which can mean a price tag of $200 or more. One Pico sells the wine for $90.
"People understand that restaurants pay for overhead, glassware, and service, but consumers are still in search of value. They come to one of the few Los Angeles restaurants right on the beach, and they fasten their seatbelts expecting to get five-star resort pricing. Instead, we show them a reasonably priced wine selection," says Neptune, who has assembled a bistro-style list of about 120 commingled Old and New World wines, including several priced under $40.
Consumer response to One Pico's wine list, printed on the back of each menu, has completely offset the diminished margin on each bottle: Since re-opening following a spring makeover, in a period of one month alone wine sales increased 287 percent for bottles and 200 percent for wine by the glass. "Restaurants, and especially hotels, get caught up in cost-of-goods. The owners here understand that you can't put percentages in the bank, and that permits us to make bold moves toward better value. Profit has actually increased with the added volume," says Neptune. The affordable list has also transformed One Pico into a destination for locals as well as hotel guests, with more repeat visits and multiple bottle purchases offering a degree of recession resilience.
"I want to have a cellar, not a museum," insists Mauro Cirilli, wine director at Perbacco, a modern Italian restaurant in the financial district of San Francisco. To keep his collection of mostly northern Italian wines from gathering dust, Cirilli and the owners have agreed on a wine list that marks up most wine between 2.1 and 2.5 times wholesale. "We are in business to make money, but we also want to show value and want people to be comfortable buying wine, not just consider it a luxury."
Value at Perbacco includes not just price, but pour: The wine list indicates a generous portion of six ounces for by-the-glass wines and also offers these wines by the quarter and half liter, which the staff translates for the nonmetric inclined as one and one–half glasses or about three glasses, respectively. Cirilli contends that "older people are still thinking in terms of the bottle, but the 25 to 30 year old audience is more accepting of the idea of carafes. Younger people prefer to try different kinds of wine, and they'll have several reds and several whites." With about 25 selections poured by the glass, Perbacco offers Giuseppe Lonardi Valpolicella Classico Veneto 2004 for $8 per glass, $11 per quarter liter, and $22 per half liter, for example.
With erratic stock market fluctuations and tightened spending--both corporate and consumer—offering wine at an affordable price has become a matter of not just hospitality but necessity for many restaurants. At New York City's Beacon, chef/co-owner Waldy Malouf realigned his list over a three month period, migrating wine selections to the $40 to $60 range from $60 to $80. "One of our big financial services clients gave us an expense account directive, explaining they weren't going to be reimbursed in the future for wines over $50 a bottle. Steady customers also started to buy in the $50 range, so we knew what we had to do," says Malouf.
Beacon has also introduced a "Family Style Sunday Supper" menu offering three courses for $44 along with a wine list offering 30 wines under $30, which appeals to neighborhood customers, European visitors who delight in rustic dishes like braised lamb shoulder or roasted leg of veal with wild mushrooms and quince, and young professionals seizing the last of the weekend. With some resourceful digging and a little compromise on mark-ups, Malouf has been able to satisfy most tastes without breaking his self-imposed $30 barrier with such listings as Serge Batard Muscadet Loire Valley 2005 ($18), Millbrook Pinot Noir Hudson River Region New York 2006 ($29), sparkling Astoria Prosecco from Veneto ($17), or Viña Borgia Grenache from Borja, Spain ($18). "With this list, guests get close to retail price and know the wines have been vetted by us," he says. Beacon is also waiving corkage fees with the Sunday supper.
Chef/restaurateur David Burke offers some highly creative wine values at several of his venues, including David Burke Prime at Foxwoods Resort and Casino in Mashantucket, Connecticut. Here, Burke offers half price wines by the glass, including 10 reds and 10 whites, during Wine Tower Hour, a reference to the multistory wine "cellar" that serves as the restaurant's landmark. Turning the early bird special on its head, the 60-minute bargain is offered not only from 5 to 6 p.m. Sunday to Thursday, but also from 10 to 11 p.m. on Friday and Saturday, when more young people are likely to take advantage. "Guests are introduced to the promotion, and they often end up staying after dinner and inviting friends to join them for a glass of wine," observes Bruce Yung, director of service for DBGlobal.
At Burke's Davidburke & Donatella on Manhattan's Upper East Side, general manager/beverage director Michael Shef appeals to a Priceline.com generation by offering diners the opportunity to name their price for a bottle of wine. Each night, a Champagne, two whites, and two reds are listed with the price crossed out to give some idea of the wine's value. Diners are invited to bid with the sommelier and the highest bid over the sommelier's reserve gets the bottle. The program promotes interaction between guest and sommelier and according to Shef has resulted in sales every night in its first week of implementation.
Vincent Chirico, executive chef/partner at Vai Restaurant & Winebar on Manhattan's Upper West Side, has made a mark for his intimate Mediterranean small plates spot with value-priced wine flights. Although Chirico worked previously at Daniel, Union Pacific, and Aquavit, Vai is his first hands–on experience with wine, giving him an outsider's edge. Chirico tried offering flights of up to nine different wines before settling on the current arrangement of three ounce pours in flights of three ($19), with occasional offerings of five ($29) and seven ($38). With flights ordered by approximately 25 percent of diners, Chirico reverted to the flight of nine, but with two ounce pours paired with nine small dishes for $69.
Many customers choose to share a flight before dinner; others come by to enjoy one after dining elsewhere. "It goes a long way to represent who we are and what we do. We're not just here to rob you of your money, and people show they appreciate that by returning often. I've had guests come in 25 times in the first three months," boasts Chirico.
Vai also offers a "wine of the day," priced at just $20 above cost. Chirico recently offered a bottle of Barolo DOCG for $62, giving younger people who might not otherwise have it a chance to enjoy a true Barolo in a restaurant setting. "To be successful and engage new drinkers, you need new ideas," says Chirico. "But also practical ones, and these are practical because of the price-point. Plus, I think presenting value is the best way to show we're superhospitality driven."