Issue link: http://digital.copcomm.com/i/457084
38 { THE SOMM JOURNAL } FEBRUARY/MARCH 2015 { the business end } THERE HAVE BEEN MANY CHANGES IN THE WAY wines are sold in restaurants since the late 1970s, when I started in the business. At the same time, a lot has not changed at all. What's gone unchanged is the most basic principle: A profit must be made. To accom- plish this, it's always been pretty much the accepted rule that the sum total of variable (or prime) costs—such as labor, liquor, beer and, of course, wine and food—must never exceed 65%. Most restaurants, after all, need at least 30% to cover fixed costs, such as occupancy and utilities, in order to have enough left over for cash flow, profit, and possible raises for you. Sommeliers, why else do you think your owners—or managers, whose salaries or bonuses are usually tied directly to cost control—never stop hammering you about keeping your wine costs down to, say, 33% (the classic three-times markup)? Simply put: If you can't keep your wine cost in line, other costs need to go down in order to make up for the loss and sustain the restaurant. One way or another, wine cost affects everything a restaurant does. If your wine cost starts to rise to 40%, then food costs, which are typically around 30%, would need to get closer to 25%; and to do that, your chefs either have to start using cheaper ingredients (it's hard to be "farm-to-table" when you're buying off a Sysco truck), or entrées need to raised from $15–$29 to $30–$60. Either that, or liquor costs (for most restaurants, kept around 20%) and beer (usually around 30%) must start to over-perform. You could also cut labor, which, of course, could severely compromise service—and nothing is more important than service. Something has to give if your wine prices get out of line, especially when sales falter—and virtually every restaurant has its down times, whether sea- sonal or due to the inevitable dips in the economy. At the same time, as sommeliers we need to sell wine. No one is arguing with the fact that it is a lot easier to sell a fantastic bottle of Pinot Noir for $45 to $65 than for $75 to $150. As a wine lover at heart, your instinct to keep prices down is entirely correct. Better wines tend to cost more, and the better the wine you can sell, the better the dining experience for your guests. Plus, consumers aren't stupid; they're not oblivious to restaurants with better wine prices than others. They can also be resentful of having to pay a lot Managing Restaurant Wine Markups in 2015 HOW TO PLEASE YOUR GUESTS, AND YOUR BOSS EVEN MORE by Randy Caparoso