Latest / Restaurant Business with Fexingo: Food Service, Hospitality, and Independent Operators / How Restaurant Wine Programs Drive Per-Head Revenue More Than Food
Transcript
- Lucas: Luna, I want to talk about something that I think is the single most overlooked profit lever in most independent restaurants, and it’s not on the food menu. Luna: Let me guess — wine. Lucas: Exactly right. And I’m not talking about the high-end bottle list at a steakhouse. I’m talking about the everyday wine program at a mid-priced Italian spot or a neighborhood bistro. The numbers are kind of wild. Luna: Okay, give me the numbers. Lucas: So there’s a data set from a consulting firm called Restaurant Sciences — they track aggregated point of sale data from about 2,500 independent restaurants. And they found that restaurants with a deliberately curated wine program — meaning at least 12 wines by the glass, with some thought to pricing — see per-head revenue 18 to 25 percent higher than comparable restaurants with a basic wine list. Luna: That’s huge. But is that because the wine is expensive, or because it changes what people order? Lucas: It’s both, but the bigger effect is behavioral. When a guest orders a glass of wine, they tend to spend more on food too. There’s a concept called the ‘wine halo effect.’ A $12 glass of wine signals to the guest that they’re having a nicer meal, so they’re more likely to order an appetizer or a dessert. The wine itself is high margin — the average wine markup is three to four times cost — but the halo effect on the food side is where the real lift comes. Luna: Right, because a glass of wine has a food cost-like number, but the margin is much better than most entrees. A $28 pasta dish might have a 30 percent food cost, so you keep about $19.60. A $12 glass of wine at a 25 percent pour cost keeps you $9. So the glass alone is almost half the dollar profit of the entree. Lucas: Exactly. And if that glass of wine encourages the guest to also order the $12 appetizer they were on the fence about, now you’ve added another $8 or $9 of gross profit. So the real magic is in the combination. Luna: So what’s the mistake most independent operators make? They treat wine as an afterthought? Lucas: Yeah, that’s the biggest one. They either have a tiny by-the-glass list — like two reds and two whites — or they price everything too high because they think wine drinkers will pay anything. Or they do the opposite and underprice to be ‘fair,’ leaving margin on the table. Luna: What’s the right pricing strategy? Lucas: There’s a rule of thumb in the industry called the ‘three-times-cost’ markup for bottles, which is standard. But for by-the-glass, you can actually go higher — four to five times the wholesale cost per glass — because guests have less reference for what a glass ‘should’ cost. If you buy a bottle for $10 wholesale, you get about four glasses out of it at five ounces each. So your cost per glass is $2.50. Price it at $10 or $11, and you’re at a 75 to 78 percent gross margin. That’s better than almost anything on the food menu. Luna: And you need to have enough variety so people don’t get bored. I’ve seen places with just one cabernet and one chardonnay, and guests who don’t like those just skip wine entirely. Lucas: Exactly. The data from Restaurant Sciences also shows that restaurants with at least eight wines by the glass, spanning different price points and styles, sell 40 percent more wine overall than those with four or fewer. And their per-head beverage revenue is about 22 percent higher. Luna: So what’s the practical advice for an owner listening right now? Let’s say they have a decent food menu but a weak wine program. Lucas: First, invest in staff training. A server who can talk about wine confidently sells twice as much wine as one who says ‘I’ll get the wine list.’ There’s a study from Cornell that showed that after a 90-minute wine training session, servers increased wine sales by 14 percent on average. And that effect lasted for months. Luna: So it’s not just about the liquid in the glass. It’s about the story. Lucas: Right. Second, rethink your by-the-glass pricing. If your most popular red is priced at $9, try bumping it to $11. You might lose a few price-sensitive guests, but the net effect on revenue is positive. Third, add a ‘reserve’ tier — one or two higher-end wines by the glass at $15 to $18. Even if you only sell a few, they raise the perceived value of the whole list. Luna: And what about wine flights? That seems like a way to get people to try more and spend more. Lucas: Flights are a great tool, but they’re operationally tricky. You need to prep three small pours per flight, which slows service. But if you do it for a specific theme — like ‘Italian reds’ or ‘wines under $15’ — it can work. The key is to price the flight at roughly the same as two full glasses, so you get the margin of two glasses but sell three tastes. Guests feel like they’re getting a deal, and you’re actually making more per ounce. Luna: Let’s talk about the fear factor. A lot of owners are intimidated by wine. They think they need a sommelier or a huge cellar. Lucas: That’s a myth. You don’t need a sommelier. What you need is a distributor rep who’s knowledgeable and can help you pick six to eight wines that work for your menu and your price point. Most distributors will even do a staff training for free if you buy from them. The investment is minimal — maybe a few hundred dollars in inventory and an hour of staff time — and the return can be thousands per month. Luna: So the takeaway for an independent operator: look at your wine program before you touch your entree prices. Lucas: Absolutely. Raising entree prices by a dollar might increase per-head by a dollar. But adding a thoughtful wine program, training your staff, and optimizing your by-the-glass pricing can add $3 to $5 per head without making your menu more expensive. That’s the leverage. Luna: And it’s more fun for the guest. A good wine experience makes a meal feel special. Lucas: Exactly. And if these conversations have moved your work forward in some small way — maybe you’re reconsidering your wine list right now — that’s the link. Buy me a coffee dot com slash fexingo. It’s the smallest ask, and it keeps this show ad-free and independent. Luna: Yeah, honestly, if today gave you one idea worth trying, that’s all we ask. A few bucks helps us keep doing this. Lucas: So here’s my final thought: before you redesign your menu or raise your prices, look at your wine program. It’s the lowest-effort, highest-impact change you can make. Start with one new glass pour and one training session. Luna: And maybe a flight or two. Cheers to that.