Local wine shop/winebar featured on CNBC's The Profit

I live just a few miles from this place (Amazing Grapes) that was featured in an episode of CNBC’s The Profit last week. The show is about an entrepreneur/investor who buys into troubled businesses to revitalize them.

I get that a show like this is a reality show and that it’s staged and edited for those who don’t know the business but want to watch the drama. In this story, beneath all that, is a tale of a wine shop that (according to local lore) was doing $6million in sales, still does $3.5million, and has never made a profit. I’d have to think that the only way that could happen is if you planned it that way.

There were so many holes in the ‘story line’, especially if you’re familiar with the place, that it may be a waste of time to analyze. I just wondered if any if you knew more than I do about this.

In some ways, though, this business is a good example of what I’ve seen as something of an identity crisis going on in this type of business model. Customers aren’t quite sure if it’s a wine and beer retail space with a WineBar, or a WineBar with a retail space, or (in this case) a restaurant. It’s a good place to begin a conversation about whether any of that really matters.

This may only be of interest to me, due to my own experiences, but I thought I’d throw it out there.

There are two wine retailers near me that each fit one of your descriptions. The one that seems to primarily be a wine bar/restaurant with a wine retail space seems to be incredibly stagnant in their wine selections and apparently just hired a new chef. . . .I have to imagine they live mostly off of the restaurant and by-the-glass offerings. The other place has no food (but allow/encourage you to bring in stuff if you so chooose), but pours tasters and glasses of 10-15 wines that rotate weekly. They have live music on Fridays, but are mostly a retail bottle shop. Their selection is always new and fresh and the staff is very knowledgeable. They both seem to be successful, but have fully committed to their selected format. It is the waffling that bothers a lot of people.

A friend told me about the show and this particular episode. Like PeterJ, I had a lot of the same issues with holes in the story. Though, it was fascinating to hear the specifics of how the business model would change and what expectations with revenue would come with it. I actually went in the space the next afternoon and looked around. I think they did a nice job with building the wine bar. Of course it was pretty quiet at 2pm on a Saturday, but I’d be curious to see what the scene would’ve been like that evening.

Just saw this episode this evening. I’m not sure expanding the bar as much as they did is going to be profitable in the long run — such expansion assumes butts are going to be in those seats on a regular-enough basis to justify the expansion.

As is often the case on this show, the owner did not come across well at all.

Worth mentioning is that the market in which Amazing Grapes is (OC, CA) is one of the most competitive price wise on the west coast. Getting profitable on 15% markups and making it up in volume is a tough game that can only be played running out of industrial and/or low rent space. AG contributed to the decline in retail wine sales margins and am not surprised they could not make money operating in a high rent space that is also fairly isolated from the population center. Just a few random thoughts - I’ve only visited once and that was years before i got itb.

Actually the rent quoted on the show really surprised me. I looked at a space in that center around the time they opened and it was going at slightly higher than industrial rates, certainly not retail rates. That must have changed over the 10 years they’ve been there, but I can certainly see your point. I’ve lived (or died) through it myself.

I assumed that AG had a well developed email business that helped to push cases out the back door…there’s your volume at low margin channel. The wine bar / restaurant space are brand enhancements, not primary revenue drivers IMO

The bar/restaurant space has higher margins but supposedly was doing about 15% of sales. The bulk of the balance, I’m pretty certain, was online sales. I’m not sure how you do $3M-$5M, even at 15% gross margin and lose money, especially if the bar biz can at least pay the rent. That’s why I had problems with what I was seeing. None of my business, though, so just voyeuring.