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The wine list: Figuring your pricing formula

Wine drinkers are looking for fair pricing in these cash-strapped times.

Although there are plenty of wine pricing formulas out there—some simple, some requiring arithmetic acrobatics—consider a few intangible factors before you get out your calculator:

What kind of operation are you running? How important is wine to your concept? What kind of customers do you want to attract? What kind of wine selection does your competition have and how are their prices? Operationally, how much attention do you give wine? Are your servers knowledgeable about wines and do they serve them properly? Is your glassware crystal or basic? Is the pour generous or scant? Do you have a large and interesting selection or just the basics?

The answers to these questions will direct your pricing strategy. If you have a casual place, your customers don’t expect–or won’t buy–fancy Bordeaux. But the days of offering just a white and a red are long gone. Half a dozen bottles of each are the minimum now. An ambitious program will have scores of wines in every category. And if you’re running an upscale restaurant, you might want a few crus on your list. Of course, an extensive program like this requires sourcing from several distributors or importers with diversified portfolios. It pays to shop around.

Calculating the correct pour is also key to pricing. A 750ml bottle is 25.4 ounces and yields five to six glasses of wine. Wine shouldn’t be poured to the rim of the glass but rather about half way to allow aromas to develop, so figure this into your cost calculations. Size the glass according to how much you want to pour, so that the amount doesn’t seem skimpy. And choose glassware to suit the concept and the wine; if you opt for fine crystal, be sure to figure its purchase plus the cost of washing and the inevitable breakage into your price.

Look for bargains in emerging wine regions, but don’t neglect some of the well-established domains. The Bordeaux Wine Bureau recently toured the United States with a roundup of 100 very affordable wines from that classic region.


Slide Rules 

Here is the most frequently used wine pricing rule:

Wholesale bottle price x 3 = Menu price

Of course, the multiplier can range from 2 x cost to 4 x cost. And most operators supplement this formula with a sliding scale, with cheaper bottles marked up higher than expensive ones.

A few operators price wines with a cost-plus formula:

Wholesale bottle price + $X.00 = Menu price

Others use the retail price as the base for the cost-plus rule:

Retail bottle price (wholesale bottle price x 1.5) + $X.00 = Menu price

Again, many use a sliding scale for the plus amounts. 


Monroe’s doctrine

Iwould be embarrassed to quadruple the cost on a bottle of wine,” says Mark Abraham, co-owner of Monroe’s in Alexandria, Virginia. “That’s not the approach we take.” Instead, he prices the 100 or so bottles on his list to sell, starting with the bottle’s retail price and adding anywhere from $3 to $8 more.

And sell they do: wine accounts for 18 percent of Monroe’s sales. Plus Abraham figures that his reasonably priced wines lift overall restaurant sales by attracting more customers. In addition to bottles, Monroe’s regularly offers eight whites and eight reds by the glass, plus a white and a red by-the-glass special every night. Prices follow the same strategy as bottles, but Abraham divides the figure by four for a generous 6-ounce pour.

Styled as an “American Trattoria,” Monroe’s has a list composed of Italian and domestic wines, the latter mostly from California, although local Virginia wines are also included. Staffers are encouraged to taste the wines, to help with hand-selling.

A few 1996 and ’97 vintage wines still rest in Monroe’s cellar. Because of the pricing method, says Abraham, wines at the top of the list are some of the best values. “If I buy a Barolo for $50, it may be on our list for $75—very well-priced for such a special-occasion wine.” Even so, many of the selections are priced in the $20 to $30 range, because Monroe’s is more of a casual, neighborhood place. “Experience has shown that seems to be the price point people are clamoring for,” he says, noting that on weekends, it gets into the $40 range.

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