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Ten Steps to Greater Wine Profits On-Premise

on-premise wine sales

Charles Gill, founder and CEO of Winemetrics, the wine industry’s premier source of on-premise market intelligence, compiled these recommendations based primarily on research published by Cornell University’s Center for Hospitality Research. A few points are simply common sense based on the assumption that wine consumers want what all consumers desire: value, diversity and information to assist purchase decisions.

1. Post your wine list on your Web site with prices.

Customers should have the option of seeing a complete wine list before committing to making a reservation. Research done several years ago indicated that over 60 percent of diners viewed a restaurant’s Web site prior to making a reservation. That figure today must surely be much higher. While over 70 percent of the chains surveyed by Winemetrics provide wine list content on their Web sites, less than 60 percent provide complete pricing information.

2. Put at least your BTG (by-the-glass selections) list on the food menu, but hopefully part or all of your BTB (by-the-bottle) list as well.*

This is a no-brainer. Having the by-the-glass selections or the entire wine list on the menu allows diners to view the list as soon as they sit down, without waiting for the wine/drink list to circulate around the table. Houston’s puts both its 70-plus wine list and dinner menu on a single sheet and whenever I visit their locations in my travels, it appears there is at least a glass or bottle of wine on every table. (It also doesn’t hurt that Houston’s margins are among the lowest of any national chain). Additionally, a wine selection on the menu permits your more sophisticated diners to easily match their wine and food selections. Just one-third of the chains surveyed provide this revenue-building feature on their menus.

3. Add multiple BTG serving sizes.*
Having multiple glass sizes, especially half-glasses, is one of the best ways to increase wine list profitability. A diner may wish to have two different wines with his/her meal without having to order two full glasses. A half glass with an appetizer and a full glass with an entrée can provide that experience without the cost of two full glasses or bottle. Also, for some diners, a 5-6 ounce pour may not be sufficient for a hearty entrée and a half-bottle or bottle too much; an 8-9 ounce glass (quartino) might be just right. According to the Cornell research, tasting portions increase sales by 18-47 percent; and if you think tasting portions are only for upscale restaurants, consider that this study was executed in a casual seafood restaurant with a 20-item wine list. In the over 180 chains monitored in 2012, Winemetrics determined that only 8 percent of chains offered all or most of their by-the-glass selections as half-glasses or tastes.

4. Add wine flights or, better, offer a build your own flight option.*
Flights are usually a group of three or four 2-2½ ounce tastes. They vary from the mundane to the exotic and are generally tailored to a restaurant’s clientele. It may be advantageous to let the customer create his or her own flight, an approach that seems to work well for P.F. Chang’s China Bistro. Flights are offered in just 10 percent of the chains Winemetrics monitors.

5. Add half-bottles.
Half-bottles enhance a wine list only if they meet two criteria: They must be fairly priced, and they should be well-known products so they don’t languish in inventory. A diner who, prior to the recession, might splurge on a well-known $50+ Pinot Noir, may still go for a half-bottle of the same wine at slightly more than half the price. Approximately 20 percent of chains offer half-bottles.

6. Price your wines fairly.
Nothing will infuriate a wine aficionado more than an egregiously over-priced wine list. The restaurant that commits this affront either does so out of ignorance or is trying to put one over on what they assume is a less-than-knowledgeable clientele. Knowledgeable wine consumers are, if anything, a savvy group of consumers and are a restaurant’s most valuable customers. They understand that an aged, USDA Prime rib-eye steak should cost more than sirloin, but they don’t understand why one restaurant would charge $60 for the same wine another is offering for $40. These consumers know what their favorite wines cost at retail and are aware when they are being gouged. The 2.5 times retail markup is usually a safe standard.

7. Expand the size of your wine list* (especially if you have a casual or upscale-casual restaurant).
According to the Cornell research, this works up to 150 items. Based on Winemetrics’ surveys, a casual dining restaurant with less than 30 wines should add selections, as should an upscale-casual dining restaurant with less than 60 wines.

8. Add well-known, higher-priced wines to your wine list or even add a reserve section to allow wine consumers to trade up.*
With consumers trading down from fine dining establishments to upscale-casual and casual dining venues, it is very likely restaurants with “trade up” wines will reap greater profits. Wine aficionados may be willing to save a few dollars on a meal but may not be commensurately reducing their wine choices. More likely, the bottle purchase will become a half-bottle or glass. Restaurants with the selection to attract these consumers will be rewarded. Just 13 percent of the chains we survey have a designated reserve section on their wine lists. This is different than having a separate reserve wine list, which most diners never see.

9. Take the $ signs off your wine list.*
Very simple, and according to the research, it works.

10. Provide recommendations either via your wait staff or, if your restaurant format permits, on a table tent.*

According to Cornell’s research, “a table-tent promotion of five wines increased wine sales of promoted wines more than promotions recommending a single wine or three, spurring a 39 percent increase for the five featured wines, a 12 percent increase in overall sales and a 4 percent increase in total restaurant sales.” While table tents may not be part of every restaurant’s format, there is no reason such recommendations cannot be made on the wine list, or even better, the dinner menu. Just a fifth (20 percent) of the chains surveyed designate featured wines on their menus or wine lists.

With the exception of expanding the size of one’s wine list, the recommendations above require minimal investment and have the potential of improving wine revenues significantly. Most don’t even require additional staff training, so hopefully wider adoption of these profit-building concepts will be something Winemetrics can verify this year.

An * indicates information based on research published by Cornell’s Center for Hospitality Research.

For more information regarding on-premise wine trends and information, please visit www.winemetrics.com.