Comments on: The tyranny of the wine list

By: Chuck Hayward

Chuck Hayward — Mon, 26 Oct 2009 22:03:45 +0000

The main issue here is not the pricing or wine styles. There are great wines made locally that would fit the preferred styles of either NOPA or Slanted Door. To use just one example that popped in my head rather easily, look at the great wines of Skylark, made by John Lancaster and Rob Perkins who are the wine buyers at Boulevard. You KNOW they make wines that work with food being on THAT end of the wine business. And the price point thing is bogus as well. Their wines are on the shelf for a touch over $20.

Again, as usual, Clarlie Olken has it right on the money in many of the issues he addresses. However, the real issue is the hypocrisy of it all. If we were to visit Italy and have Aussie wines rammed down our throat, we would scream in horror and decry the internationalization of wine. At the same time we want, sometimes require that, that we drink the wines of the regions where the food comes from. We romanticize how great it is drinking pichets of vin rouge in southern France and marvel at how the food of Bologna goes so well with the local wine. What arrogance allows us to be exempt from all of this?

By: Phil

Phil — Mon, 26 Oct 2009 21:35:27 +0000

Greg, definitely agree that there are many approaches to restaurant profitability, and as bob pointed out, some without liquor. My point is that any approach has to be integrated across the entire restaurant operation, that simply lowering your markups does not necessarily increase your profit. The other consideration is differentiation, there are plenty of great stories about low-markup establishments that really make it work, part of the reason why it works for them is that not everyone does it that way so they can attain the volume they need.

As a side note, I think the reason you don’t see more restaurants doing what you suggest is because the overwhelming majority of consumers make pricing decisions based on the price of the food, not the price of the wine. I know wine folks don’t like to hear this, and restaurant people are I think uncomfortable stating it, but I think the fact is that most restaurants set up their pricing models with non-connoisseurs in mind and don’t worry as much about turning off people who really know their wine.

The break-even point is not about marginal profit, to my mind, where I agree that you better not be losing money on every plate, but overall profit. Since fixed costs can be so high, the question becomes does the marginal profit on food cover all of your fixed costs and then some?

The bottom line on this entire topic is that people vote with their wallets. If the pricing at a restaurant is out of whack and stuff doesn’t sell, either the restaurant will adapt or fail. If the stuff is selling, then by definition the prices are not out of whack. This is a pretty pure industry in terms of free market pressures and I think most restaurant operators want to make as much money as they can. So if a place can sell 10 bottles of a particular wine in a month at $350 versus 15 bottles a month at $200, they’ll price at $350, a full $150 more, which seems outrageous, but makes them more money. I do think that some places don’t look enough at the possibilities of increased profits through models that differ from the established standard and there are certainly places that can do better by lowering their prices, but if prices were as bad as everyone claimed, then it wouldn’t have taken a big recession to put a serious dent in the industry, they would have been in trouble years ago.

By: Greg

Greg — Mon, 26 Oct 2009 18:12:04 +0000

Phil, I’m wondering if a restaurant couldn’t operate under a different business model. Raise food prices a few $ per plate, then move a bit more volume on drinks. Many restaurants seem to operate on this “jackpot” scheme where they make all their money Fri and Sat and off a few expensive wine sales. They don’t need to aim for volume like Applebees, but they are basically saying they sell a luxury good, so you pay a lot. There’s a middle ground that can be attained, if you are smart.

Another I forgot to note is Steve’s list has about 75% white wines listed. Reds are the biggest problem with respect to spoofulation. Definitely a lot of producers offer great inexpensive alternatives to the butter Chard avenue now. But the oak chip red still dominates. I’m still fairly certain there’s no commonly available red Beaujolais or CdR equivalent. Something maybe funky/Bretty, rusticly tannic but dry would be perfect in this role.

By: bobzaguy

bobzaguy — Mon, 26 Oct 2009 18:03:38 +0000

I have written wine lists in Chicago for over 20 years now.
People continue to complain about the “overpriced wines” in restaurants. Some here have rightfully said it isn’t easy to do, and they are right.
As for why some local San Francisco restaurants don’t feature local wines, I think it is a marketing concept. Trying to stand out in the crowd for the consumers and also get some critical awards. With the internet around, it is easy to see what everyone is doing with their lists and menus. The consumer can see this as well.
As to the idea that restaurants “just break even on the food” –that is so much BS. If they are open for any length of time, they are making good profit on food. Only the closed places don’t profit. If an 8-10 oz $30 ribeye steak dinner has a cost of more than $10, I will show you an operator who is going to change his price very quickly.
A restaurant without a bar business is also not paying sometimes costly licensing fees, insurance rates, etc.
It takes a lot of $10.00-a-bottle profits to pay the current $4400/yr city fee. Payable every 2 years –$8800 payment. Close to 40 cases of wine a year to just pay the license costs. Then there’s the liability insurance required. Thousands more in payments per year.
It’s not easy to sell those less expensive wines in restaurants except by the glass. $10 retail bottle prices point to $7± wholesale cost. And these wines are what are loading the shelves at grocery, wine, liquor stores everywhere. Not an indication of quality that every restaurant wants to be known for.
Those $150 wines at retail are going to cost $100±. And not everybody who eats at the restaurant is aching to pay over $200 or $250 or more for 5 glasses of wine.

By: Jason

Jason — Mon, 26 Oct 2009 17:47:25 +0000

I saw an amusing quote from a wine list recently. It said “we do not charge the usual triple to quadruple markups on our wines.” Quadruple markups? I suppose that was to make me feel better about “only” paying double to triple markups. I did not order any wine.