Daniel makes the point that always seem to be forgotten in these discussions: the restaurant business is one of the toughest businesses to succeed in. Now if you want to argue that the reason so many places fail is because they charge too much for the wine and therefore people don’t go there (people in general, not just highly wine educated folks like those that frequent online discussion boards), that’s a debatable point. But from the way some of these types of threads go on about restaurants, you’d think this was one of the most profitable businesses in America (maybe after oil)–with the detractors pointing to the 3x markups on wine, and the defenders pointing out that there are 3x markups (or more) on everything, so why are you picking on just the wine? Yet somehow many of these places struggle to make money. Lost in the discussion seems to be the distinction between gross and net sales.
I personally think too many places rely on paint-by-numbers pricing and costing throughout their place and that’s why so many end-up with the “textbook” markup on wine. There are definite examples of places that succeed with much lower markups, but a lower markup isn’t just a magic wand that you wave and presto: you still have a profitable wine program that frankly helps subsidize much of the rest of the place. As in any business, the whole operation needs to be geared toward whatever the pricing model may be, so a place like Passionfish in California makes it work, but three of their competitors tried it and failed.
I am a fan of the saying that you can’t take % to the bank (I know Roy Hersh likes to use that one), but you also can’t pay the bills with goodwill. A smart operation balances the two and works to earn their markup (an entirely different subject relating to service, managing the wine list, etc.).
I see one of the main points of the article as “Hey, if you wanna play safe and order commodity brands or be intimidated by the unknown, you may pay for it.”
So where does that leave you? Either you get an education, use a smartphone to help you, or trust the somm.
Perhaps a mix of the above is the best answer. It’s kind of like that old Symms clothing store ad tag line:
“an educated consumer is our best customer”.
In lieu of that, you’d better have a sommelier or waiter you can trust. And hell, who would want a customer to purchase a bottle off the list and find out down the road that the wine was marked 2-300% anyway? You don’t make friends or repeat customers that way.
But using the Santa Margherita example, if a customer will only use their intimidation and ignorance as their guide, their gonna pay for it.
The easy profits are over, and restaurants hoping to weather the recession ought to think about dialing back their wine prices. Kevin Zraly, a New York-area wine educator who helped pioneer the use of progressive markups when he oversaw wine service at Manhattan’s Windows on the World, says that at this point, restaurants just need to fill seats and should scale back their wine markups as a way of attracting diners. “Wine is a tool to get people into restaurants, and in this economy, wine prices need to be dropped to do that,” he says. “We had adjustable-rate mortgages, now we need adjustable-rate wines.” He also says that restaurants that allow customers to bring their own wines but charge relatively high corkage fees should think about reducing the amount they charge for BYOB. Zraly believes $20 per bottle is a reasonable tariff.