In this down economy, some restaurants have taken their eye off beverage while trying to survive. That’s a big, possibly fatal, mistake.
“Beverage still [carries] a huge and in some ways disproportionate share of a restaurant’s profitability,” points out David Henkes, research firm Technomic’s vice president and director of its on-premise practice. “Beverage needs to play a role in coming out of this recession.”
“In the past, a sloppy beverage operation could still be profitable. That’s no longer true,” says David Commer, president of the Carrollton, Texas-based Commer Beverage consulting firm. All the little details that used to be kind of important are now really important—maintaining discipline in systems and controls. “Count every drop because every drop counts,” warns Commer.
There’s no one right move to keep afloat during these difficult days. Here are five ways that operators are adjusting their beverage strategies to these changing times.
1. Can’t sell the bottle? Just sell half.
Expanding the wines-by-the glass list is more important than ever. Your customers are not only trading down from that $70 bottle to the $30 one, they are trading out of the category altogether. However, even if diners are opting not to order bottles, they can be enticed into drinking a glass, or even two.
But the larger a by-the-glass list gets, the harder it is to manage. More bottles open often means more spoilage—profits poured down the drain. Nitrogen-dispensing systems reduce that problem, but they are expensive and can only handle a limited number of bottles.
One operator has found an ingenious solution. Customers at the new Bar Henry bistro in Manhattan can order any wine in the 100-bottle list and only drink—and pay for—half the bottle.
“If a customer commits to two glasses, I’ll open the bottle and sell half to them for half of the full bottle price,” explains Bar Henry’s sommelier John Slover, who also works with Grand Cru Wine Consulting. The remainder is sold to other guests by the glass for a quarter of the bottle price. Glasses available from those open half bottles are noted in grease pencil on a mirror in the bar (a chalkboard is used in the 35-seat dining room) and then crossed off when sold. “When they walk in the door customers can see what’s available, what they’ve missed,” says Slover, who adds that by the end of the night the entire mirror is scrawled with grease marker. The half-bottle concept offers customers many more tasting options and Bar Henry sells more wine.
2. Strive to be different. Now more than ever.
“Operators need to evaluate their beverage program, what’s driving it, what differentiates it, why are people ordering what they’re ordering,” says Henkes. Technomic’s research indicates that although customers aren’t necessarily going to restaurants for the beverage program, it can be a great source of differentiation and customer satisfaction once people are there. “There needs to be something unique about a beverage program,” adds Henkes.
“Serving craft beer is a point of differentiation for us,” says Neil Newcomb, director of franchising for Brixx Wood Fired Pizza, based in Belmont, North Carolina.
Indeed, the 17-unit chain is unique among pizza concepts with its 24 craft brews on tap, as well as a number of import and domestic bottles. The craft beers garner about 20 percent of sales.
Brixx further leverages its beer selection by offering tap brews for $1.95 on Mondays. “That makes it a very busy day,” says Newcomb. Similarly, on Thursdays, imports are priced $2.50, and bottles of wine are half price on Sundays.
“We’re not losing money on the product,” points out Newcomb, “and customers who come in for the wine or beer order a pizza.”
3. Dig deeper for variety and value.
Even if you get customers in the seats, it’s a tough sell for beverages. When they do buy, customers are trading down to lower price categories and scanning drink lists for values. These days consumers are not only more sophisticated about fine wine, craft beer and classic cocktails, but they know retail prices and balk at restaurant markups. They won’t buy, for example, a $30 bottle (marked up 2.5 times wholesale), when they know they can get it at the store down the street for $15. But more esoteric labels can still be profitably marked up—and offer the added advantage of intriguing those more-sophisticated diners. There are also great-tasting bargains out there, but you have to dig to find them.
“I’ve been exploring new wine regions for values,” says Marian Jansen op de Haar, director of wine for Fleming’s Prime Steakhouse & Wine Bar. As examples, she cites some of the more obscure regions in Spain and South Africa as well as taking advantage of the recent glut of wine available from Australia.
This year more of the wines at the Newport Beach, California-based chain’s 64 upscale restaurants are from those and other lesser-known regions and grapes. The advantage of these discoveries, points out Jansen op de Haar, is that she can offer them at lower, but still profitable, price points. Many can be found in the new “30 Wines for $10 or Less” section, such as Pares Balta Cabernet-Garnacha from Penedes, Spain; Guardian Peak Cabernet from Western Cape, South Africa; and Hope Estate Merlot from Hunter Valley in Australia.
“It takes a lot more searching,” says Jansen op de Haar, but she believes it pays off.
According to John Slover of Grand Cru Wine Consulting, one smart purchasing strategy is dealing with companies that buy directly from producers. “The distributor is also the wholesaler, importer and the agent,” he says. That means fewer markups and lower prices. They’re tough to find, but a big value if you can.
4. Tweet to stay on top of trends.
Social media is not only one of the coolest tools to market your place, but it’s also a way to get your hands on that obscure bottle and discover the latest trends.
“There are other opportunities with social media besides marketing your beverage program,” explains consultant Commer. He cites the ability to search products to source as well as a means of keeping current with drink trends.
“I use social media if I am considering a certain wine,” says Annie Turso, wine director for the Mandarin Oriental New York Hotel. But she’s careful to pick and choose from among the many opinions out there in cyberspace.
Follow a few of these folks on Twitter to keep track of beverage trends:
- @Total_Wine. Greg Tuttle works in the corporate operations/education department for superstore retail chain Total Wine and More.
- @NatalieMacLean. James Beard Award winner Natalie MacLean has authored the popular “Red, White and Drunk All Over” and is creator of the Food & Drink Matcher mobile app.
- @michaelshearin. Sommelier Michael Shearin has worked at some of the top restaurants in Vegas and
is now beverage director at the grand, new Drago Centro restaurant in Los Angeles.
- @garyvee. Iconoclastic “wine guy” Gary Vaynerchuk is host of the populist and popular Wine Library TV.
- @RobertMParkerJr. Perhaps the single most influential critic in the world of wine today.
5. Pour less to pour more.
In most restaurants, a generous pour of wine by the glass is six ounces, or about a quarter of a bottle. Typically, the glass is sold to customers at the wholesale price of the bottle, or about a four-times markup. But sizing down that pour has a number of advantages, especially these days. Getting five or even six glasses from a 750ml bottle is obviously more profitable, even if the by-the-glass price is reduced slightly.
“I’ve noticed a number of restaurants reducing the size of the wines they pour by the glass,” notes consultant Slover. The practice isn’t deceptive, says the consultant, if prices are scaled down as well. “People are willing to get less if they pay less,” Slover believes. “Making the numbers smaller appeals to consumers’ current sensibilities. These days, customers don’t want a $12 glass of wine, they want a $7 or $8 a glass.”
Downsizing is also a better scenario for tasting. Guests can afford to try more wines and the smaller portions mean they can drink more without becoming too inebriated.