It's a confusing economic world that we live in right now. I admire the spunky restaurateurs in the up-and-coming Mission area of San Francisco, and appreciated the bravado of the "Stimulus Dinner" sandwich-board sign at the corner of 22nd and Guerrero. This French restaurant offered a delicious 3-course meal for $29. What they didn't offer was a Stimulus Wine-by-the-Glass list. The least expensive offering, their house Chardonnay or Sauvignon Blanc, was $8. It was almost enough to make you order tap water as the beverage of choice.
I don't really understand wine-by-the-glass pricing, so I'd like some commentary here. I've heard folks say that a glass of wine should be priced so that it pays for the cost of the whole bottle. If I've heard that, you can bet that other wine drinkers and Joe/Jane-average-consumer have heard it too. It doesn't exactly make you feel warm and fuzzy at the thought; in fact, it kind of feels like price gouging.
On-premise sales are suffering as belt-tightening keeps more consumers dining at their own tables. A chat with LJ Brimfield at Piazza Market in North Beach on Sunday afternoon confirms that; their sales of value-price Italian wines are 'way up, and he attributes that to the dine-at-home movement; he gets asked a lot what wines will go with the "I'm preparing a chicken dish" course.
So if restaurateurs want to offer a Stimulus-Pricing glass of wine, just how do they price that? Is it 25% of a 3-course meal? Seems high to me. That glass of tap water just might be a serious contender for a value beverage...
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The problem is not the pricing strategy, but the selection for a by the glass program. Wine is an expensive investment for a restauranteur and a well developed wine list has a lot of say about the style of the restaurant.
ReplyDeleteRight now progressive restauranteurs need to downsize from high-end BTG offerings by buying less expensive wines that have less cache and name recognition. The price of proteins, cuts of beef in particular, are dropping so chaf's can afford to make affordable meals and still cover costs. The beverage managers have not reacted in the same way because wineries and distributors have not dropped thier prices in the same real time. The wine on the shelves still cost what they were purchased for 3 to 9 months ago.
Todd Brinkman
Sorry to seem pedantic, but there is no "n" in restaurateur.
ReplyDeleteRegards,
jb
My apologies. Blogspot doesn't have a spellcheck function, it was late, hot, and I was hasty. I try to keep an excellent standard of English, but am guilty as charged.
ReplyDeleteAnd I've just made the corrections, because I don't want to be even more guilty of misleading a rapid-reading public.
ReplyDeleteAs someone who eats out often, worked in the restaurant business for years, and currently works in the wine business, I have given this issue some thought.
ReplyDeleteTrue, wine by the glass is rarely a good value, but it has to be priced to account for spoilage-hence the idea of covering your cost on the first glass. Then there is stemware, which breaks easily, personnel, storage, and all the other costs of running a restaurant. Keep in mind that the restaurant doesn't make any money until it sells a second glass or more likely, third glass from that bottle.
And ask any server or wine buyer which is the slowest selling wine on the list. It is usually the least expensive, not the most. Restaurants could find good wine that has a wholesale price of $4 or $5 per bottle and charge less for it...people just don't buy it.
And lastly, why do people always pick on the mark up of wine in restaurants? If it is sold by the bottle wine is generally marked up 3 times, 4 times if by the glass. Draft beer has a mark up of about 10 times and spirits about 20 times or higher! But nobody complains about paying $7 for a cocktail!
Usually we purchase a bottle of wine when at a restaurant. However, I have to admit that when my husband purchases a glass of wine, I tend to cringe because of the price.
ReplyDeletePerhaps restaurants should consider the purchase of an Enomatic dispenser. While they are somewhat costly, perhaps they would be cost effective and the cost of a glass of wine could be reasonable.
Cheers!
Alcohol has always been very profitable for restaurants, to the point at which it makes up for breaking even on the food. So I don't imagine that restaurants will give up on price gouging for wines.
ReplyDeleteWines by the glass are meant to increase the overall check average in a typical restaurant. The high cost of rent, utilities, glassware, cleaning and personnel (especially in a city like San Francisco) dictate that a restaurteur make a substantial profit from a beverage that will only be purchased by a few. Just as a note the profit margin for wine is substantially smaller than tea or coffee. Modern wine list pricing is about seeing if you can get a customer to purchase more than one glass....unlikely in todays economy. A glass of wine is usually priced at one quarter of the bottle's wine list price. They most likely could not make money on the $29.00 three course meal so they thought they could increase their profit from their wine list.
ReplyDeletePhil Durrett
Restaurants will just have to get more creative in addressing this. Quartinos and half bottles can be ways of getting at this, along with Enomatics. I actively avoid places where I am likely to face a by-the-glass ripoff. (Add to the price, the fact that BTG reds are habitually served too warm, and that BTG orders often receive inferior stemware to those drinking from a bottle.)
ReplyDeletePhil - The problem is the pricing strategy. I agree with what the on premise "system" has been. That was fine thirty years ago. It is a new day that calls for new thinking. It is about fannies in the chairs and wine on the table. You do not take margins and percentages to the bank. They like dollars.
ReplyDeleteAs a long-time restaurant person, now involved exclusively in the wine business, the one glass equals one bottle wholesale formula is ludicrous and makes winemakers cry (400-500% profit, really!!!???). It is an old world mindset that is no longer valid. Interesting low-priced glass pours (think Rhone, Loire, etc.) require a trained hand-selling staff to inform the patrons and sell the items that can be found at five wholesale a bottle, and no restaurant wants to pay for a well-trained staff. I know because I have worked and quit seven of them. A value by the glass, like a Minervois takes a personal touch to sell over that Chardonnay, and there is the rub, and why most glass lists are abominable artifacts pandering to the assumed dullness of the clients.
ReplyDeleteThe price structure around “wine by glass” programs is to ensure the restaurant covers its cost by opening a bottle of wine. If the restaurant only sells one glass of wine (before it turns) they essentially cover their costs (no profit). This makes sense for programs with larger wine by the glass programs or programs that offer unique offerings. Not all wine by glass programs are ripoffs. I use to sell some pretty special offerings at reasonable prices and I offered my customers something they might not otherwise buy (e.g. $100 bottle). House wines are where restaurants (typically) make their money. If you feel you are getting ripped off buying a glass of wine, consider buying a bottle (1/2 bottle if offered, (I wish more restaurants carried them), or drink a cocktail. On the opposite end of the spectrum, I feel that many restaurants need to revise their pricing structure. I’m not about to pay $40 for a wine that retails for $15.
ReplyDelete...Also, I’m not sure why everyone seems to jump on the bandwagon to say that you have to price out a glass of wine taking stemware breakage, storage, etc. into account. This is a separate cost built into the Profit & Loss (P&L) statement. China and glass does not directly affect wine pricing structures. Yes, it ties into the bottom line profit, but you shouldn’t be thinking about how many glasses might break when you price out a bottle (or glass) of wine. When chefs cost out menu items, do you think they think of breakage costs when pricing out a dish? Heck NO!
ReplyDeleteMost of us can’t pour draft beer at home. But we can pour a glass of wine from a bottle. We go to the store and see a bottle of wine for $20. We got to the restaurant and it costs $60. You can’t be surprised when there is a visceral response to this disparity. Then if a glass of the same wine costs $15, the customer will balk. Anyone would.
ReplyDeleteYou’d feel the same if you were able to go to a local refinery and buy your own gas at 25% of the cost at a gas station. You’d wonder why you were giving so much money to the station. Oh, right – convenience.
We who regularly enjoy wine purchased in restaurants have “suspended disbelief” so to speak, in order to partake in the experience with the least amount of angst. We buy wines that we cannot find in our local wine shops, or are so perfectly matched to the food that we can’t resist. Finally, we remind ourselves that we are paying a premium because we have the convenience of having that restaurant select, hold, chill, and place the wine into glasses. And we make piece with it.
I don’t buy the “we buy the glass and wash the glass and pay the person to push the button to make the glass washing machine go, and there’s wear and tear on the floor from waiters walking and breathing, so we have to pay them too…” There isn’t a wine glass washing contractor who is called in to hand wash each glass individually as the need arises. Many glasses are washed at once; can the diner get a pro-rate based on how many glasses are handled by a single washer in an hour? It’s called “overhead.” And it is absorbed into the cost of running the entire restaurant. The cost of selling the entrees and appetizers that led you to open the business I the first place.
BTW – I’m in the wine business too. So it hurts me to my heart when I pay what is an even higher mark-up for me since I get all of my wine at cost. I bite the bullet for the reasons stated above, but I do it within reason, making an informed decision. And I’m not the least bit perturbed by the fact that other diners.
Kim
Very interesting discussion. Came to me through a google alert. I have a friend in the wine trade who always says you take dollars to the bank, not margin. I've had a little experience in the restaurant biz, also as barman. I drink wine every day in the 10 to 15 range.
ReplyDeleteI recently had the experience of going out ot dinner with a friend, her treat, she owed me, which is relevant because the wine list was short, mediocre and pricey. The one wine I knew and was sure of was a cotes du Rhone that retails for 10 which I often drink in summer. $29. on the list. I didn't want to pay this, even though it wasn't my bucks. the BTG red choice was French plonk (sold in liters) at 6 bucks BTG. N prevailed on me to order it as it was the only thing we could be sure of, the rest that I knew by name were equally overpriced and flat out not worth retail to me.
I agree this is annoying at best, and keeps people from buying at all which I would have, except for the occasion. and then we wound up not finishing the bottle as I had an hour's drive home.
I rarely go out to eat here in the Berkshires as most restos are overpriced for what they offer and the wine is worse. So except for the atmosphere/experience/occasion aspect for me it's preferable to stay home and cook and enjoy a better bottle than usual.
This is a problem on the east coast, in CT, MA, upstate NY where this crime took place, and even Maine where I lived several years, pretend restos that Gordon Ramsay would have a field day with, and too bad he doesn't.
Fair priced decent BTG would tease more $ out of my pocket any day.
BTW I grew up in Manhattan, lived in Paris, have eaten out thousands of times. Rural living is great except for the food at least on the right coast.
ps re: washing glasses that's my biz now. If I may plug my product I developed it after finding my dishwashing liquid was leaving bitter tastes and odors and dulling the glasses. it's at crystalcleanglass.com