The wine list is an essential part of your restaurant or hotel beverage service, so let’s apply intelligent design and business thinking to increase profits and ensure it appeals to the greatest number of people. Covid has given us time to rethink menus, and customers have come back with less money in their pockets. The popular Aussie BYO is now available in fewer restaurants, and there needs to be a rethink about the wine range and pricing, especially if customers can no longer bring the good bottle they bought for $12 and now have to pay a minimum of $50 from your range. There are ways to make everyone happy, including the operator who’s chasing wine list profits.
Aussie chef and TV personality Adam Liaw recently made a respectful request for the return of house wine and other affordable restaurant drink options, so let’s start there – he speaks for many people. The law of supply and demand applies to wine as well as commodities – as prices rise, demand goes down.
Develop the Wine List Range and Descriptions
Good Descriptions help to sell the wine. You can find descriptions on the label or catalogue – use three words or a sentence. This gives customers confidence in what they’re choosing – most people have no idea what the Riverside Pino Grigio is actually like! Use familiar terms as part of the wording: crisp, full-bodied, light, cherry, plum, lemon, pineapple etc – fruit comparisons are accessible to most people. In reality, most of your staff don’t have the time, knowledge or confidence to make recommendations – just like a food menu; the wine list has to do much of the ‘sales work’.
Offer great House Wine options. A couple of whites, reds, roses and a sparkling, but with a name and promoted with pride. People assume this is excellent value by virtue of it being called ‘house wine’ – you sourced it for $7 and sold it for $29 or $34.50. Still a significant margin and happier customers. Nice!
Create a Balanced Wine Range – make it smaller than pre-Covid; that’s one of the new rules of menu marketing. Smaller, simpler and less expensive to stock. Reds, whites, rose, sparkling, some lower and medium-priced, plus a few high-priced items for special occasions or showing off. Light ones, full-bodied, unusual and familiar – comfortable ordering for the conservatives and something different for adventurers. Some imports, some from Australia and some you can call Local – the L-word is magic for all menu marketing.
Avoid comparisons – there’s always someone who knows the price of a bottle at the bargain bottle shop or does a quick Google. Instead, ask suppliers for their restaurant-only range. And yes I have seen the $3.50 bottle from Dan Murphy’s on a wine list for $19… we notice!
Offer great Wines by the Glass. Keep the number small unless you’re super busy, and invest in a wine-dispenser system for more expensive bottles. Watch for waste and over-pours – the stocktake system should pick up on that. Can you upsell from a glass of wine to a bottle by reminding people that they can take the remainder home for later? [check local liquor laws with all innovations]
Add some flights, glasses or small carafes for those who want more than one glass (most people). 2 x 100ml glasses as a mini-flight, or a 250ml or 500ml flask, poured from the bottle. Experiment, and see what lifts overall sales.
Wine List Sales & Marketing Techniques
Use Menu Design Principles – the first bottle in a section will sell more just because it is first, so make sure it has a high-profit margin. Listing from cheapest to dearest makes no sense and could reduce profits. The 80/20 rule will also apply here, with 80% of your sales likely to come from 20% of your list. Using menu engineering principles can make a significant impact on sales.
Offer a Ladder of Prices – from inexpensive up through a middle range to prestige, and maybe some that are very expensive. This could be from $29, then a $30-40 spread and up through the $60 range, with a couple at $150 or more. Or from $42 through the $60-80 spread to $180. Prices need to be consistent with your menu prices and service – budget food and expensive wine on the same list look odd, as I found recently at a casual cafe where the cheapest white wine was $55 for a bottle. There are also price-points to consider – above or below $30, above or below $60, and $100 – they should mark a good jump in quality and what the customer can expect.
Also, think about what are the second dearest and the second cheapest – some operators say these are the big sellers, so choose them with care.
Improve the Wine Knowledge and Sales Confidence of staff. It’s simple – everyone should be able to talk about ‘their favourite’ and ‘everyone’s favourite’ in each of the red, white and sparkling categories. If they don’t drink, they can still make recommendations. Use wine salespeople for regular training sessions – they love doing this, and make sure they are truly educational, not just pushing one brand. Organise tastings across varieties, e.g. pinot gris or pinot grigio in one session and rose in another; the aim should is to increase staff knowledge of tasting terms and styles rather than just pushing one particular label.
If you have the demand, there’s a role for an in-house wine and beverage trainer – someone who organises information sessions and product training. They can also find the best short videos on YouTube to back up product tastings (there are thousands). Ask for a volunteer – an enthusiast will do this best. Give them support with the Wine Aroma Wheel and the resources at Wine Folly, and inexpensive wine picture books are available second-hand.
Make Wine & Beverages a Pillar of your Marketing Calendar. Whether it’s wine, cocktails or special beverages, it deserves much more promotion than it usually gets. If interest groups are segments in your email marketing, make sure to identify people who’ve shown particular interest or attended a wine event.
Social media loves photos, and there’s no shortage of opportunities for images with people enjoying wine, new stock arriving, the wine training sessions and wine flights. Unfortunately, most wine promotion is too serious and lost on the 90% of casual drinkers who are not specialists. Lots of upsides here, and maybe another job for the wine trainer, if only to take plenty of photos.
Wine List Finance and Profitability
Price to Maximise Revenue – some say the mark-up should be 150%, others say 120%. Others are happy to multiply by five and sell a boatload! Think ‘dollar profit margin’ – dollars pay the rent, not percentages, and there’s only one rule: offer great value and charge as much as you can. You may have bought a pallet of unknown but great-tasting wine for $8 per bottle – who says you can’t sell it for $38?
Manage your Stock for Carrying Cost and Security. Cash, food and alcohol are targets for internal thieves or break-ins. Accurate weekly stocktaking is an essential part of the cost-control routine, and external services like Barmetrix can bring waste and loss down to 1% or lower. If there is theft or over-pouring, it will be picked up quickly. Thieves don’t work long when there are no opportunities. Spot-checks are also an excellent way to remind staff that you are watching and counting. How good are your locks, video monitoring and security systems? Who has keys, and when were they changed last?
Set a budget for liquor stock on hand, and measure the turnover. The Point of Sale shows retail sales and the number of items sold. Compare this with the total value of stock in your cellar. If you sold $3,000 (wholesale value) worth of wine in a week and you are holding $18,000 worth of stock, it’s taking you six weeks to turn the supply – too long for a small operation. If you brought down the stock-holding to $10,000 and ordered more regularly, the other $8,000 can go into your bank account. There’s a lot that can be done with modern Point of Sales systems, barcode scanning and stocktake systems.
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