A pricing strategy for your wine list is vital to the long-term success of your restaurant. If the wine is priced too high, you won't sell enough wine and if the wine is priced too low, you won't sell enough high-margin wine. Remember, the first thing you need to do is develop an overall pricing strategy.
The sale of wine by the glass represents more than 60% of the wine consumed in hotels and restaurants. Whether it's to meet the needs of wine lovers, to offer food and wine pairings or to adapt to stricter alcohol regulations, offering wine by the glass has become a real need for hotel and restaurant owners.
Not meeting this demand means disappointing your customers and depriving you of potential sales.
Offering wine by the glass on your menu allows you to reach customers who might otherwise only have ordered a carafe of water. Indeed, wine by the glass is perceived as more affordable and economical.
Serving wine by the glass is not an easy task. In addition to having to manage the risk of waste and inventory, wine requires proper serving conditions. While it is easy to decant a full bottle of wine, it is much more difficult to aerate a wine intended to be served by the glass, without knowing when the next glass will be sold. Therefore, wines served by the glass are generally not aerated. The wine is served directly from the bottle and, if the bottle has already been opened, it may be oxidized.
There are industry standards for developing a pricing strategy. One of them is to price a glass of wine at the wholesale price of the bottle.
In other words, if you were able to purchase a case of wine from your supplier at a price of €10 per bottle, you should price that glass of wine at €10.
Another pricing strategy requires a little more calculation but is just as useful. For a standard 750 ml bottle of wine, calculate (on average) how many glasses you make with that bottle.
For most restaurants, this results in a number between 4 (most generous) and 6 (least generous). Let's take an average of 6 drinks per bottle. Simply divide the price of the bottle by the number of glasses to get the appropriate price per glass. So, if you sell the bottle for €60, that implies a price per glass of €10. In other words, don't hesitate to charge a higher price when volumes are lower.
You can't expect an opened bottle to last long, even with the most modern wine preservation techniques. If you open a lot of bottles and don't finish them, you may have to raise your prices.
That's why, although more complex, the second method is actually more effective in ensuring you make a profit. If you only serve 5 glasses with one bottle, you should price that glass of wine at €12, not €10.
Regarding the bottle, the industry standard is to mark up a bottle of wine by 200-300% over its retail price. So if a high-end wine sells for €20 at a retailer, it is likely to sell for €60-80 in a restaurant. For rare, expensive or specialty wines, markups can be as high as 400%.
A wine list is dynamic and lively and must respond to the needs of the customers. If a bottle is not selling at the expected rate, it should be removed as soon as possible. Unfortunately, wine lists cannot usually be changed daily, weekly or even monthly. In many establishments, the interval between rotations can be as long as six months.
To solve this problem, don't hesitate to change the price or offer specials on a particular wine. Even if you lose a few margin points, it is better to sell wine than to let it sit unopened. Lower prices will seem very attractive to customers - it may convince them to order a wine they weren't interested in in the first place.
Raising the price can also have a beneficial effect. According to one survey, wine drinkers in restaurants actually prefer more expensive red wines. When offered a list of wines between 8 and 15 €, they preferred wines between 11 and 15 €. This is probably due to the fact that consumers are looking to treat themselves when they go out and associate high prices with quality.
Wine should be priced dynamically, using data. This data can be collected from a variety of sources, such as one's POS or kitchen management tool. Since wines generate more profit than any food item on your menu, it is important to maximize the profit potential of your wine list.
Wine managers who work their supply chain to get special offers and discounts on wine have an advantage. Every euro saved on wine purchases is immediately added to the restaurant's bottom line once a bottle of wine is sold. By making adjustments on the fly, you'll be well positioned to keep your wine list running smoothly - and profitably.