Latest / Restaurant Business with Fexingo: Food Service, Hospitality, and Independent Operators / Why Restaurant Wine Programs Are More Profitable Than Food
Transcript
- Lucas: So here's a number that stopped me: at a lot of fine-dining restaurants, the profit margin on wine is somewhere between sixty and eighty percent. Compare that to food, which typically runs fifteen to thirty percent after all the labor and waste. And yet most operators spend ninety percent of their menu-development energy on food. Luna: That tracks. I've heard sommeliers say the wine list is actually the most profitable square foot in the building. But it's also the most intimidating for a lot of owners. Lucas: Exactly. And that intimidation leads to a lot of missed money. I want to look at how the smartest restaurants are treating wine not as an afterthought but as a disciplined profit center. And specifically, how they're using data and staff training to push those margins even higher. Luna: Okay, give me a concrete example. Who's doing this well? Lucas: Le Bernardin in New York is the classic case. Their wine director, Aldo Sohm, has built a list where roughly sixty percent of bottles are under a hundred fifty dollars, which is aggressive for a three-Michelin-star restaurant. But he's also structured the by-the-glass program to have a much higher markup. A glass that costs them eight dollars might go for twenty-two. That's a one-seventy-five percent margin. Luna: Right, because the customer sees a glass as a low-commitment entry point. They're not comparing it to retail the way they might with a bottle. Lucas: Precisely. And the psychology is key. A lot of restaurants underprice their by-the-glass wines because they think it's a loss leader. But if you look at the data from Toast, the point of sale system, restaurants that price by-the-glass at a three to four times markup actually see higher overall wine revenue. Customers don't balk because they have no reference point. Luna: But doesn't that risk alienating wine-savvy customers? The ones who know what a bottle of Caymus costs at retail? Lucas: It can, which is why the smart operators tier their list. You have the high-margin, high-turnover wines by the glass, and then you have the trophy bottles for enthusiasts. But even on the bottle side, the best restaurants are using dynamic pricing. I'm not talking about surge pricing like Uber, but adjusting markup based on how many cases they have, what the wholesale price was, and what similar restaurants nearby charge. Luna: Is that common? I feel like most independents just do a standard two-times cost markup and call it a day. Lucas: That's what most do, and it's a mistake. A two-times markup on a hundred-dollar bottle gives you two hundred. But if you're the only restaurant in town with a specific vintage, or if you've aged it in your cellar for three years, you can justify a higher price. The key is having a sommelier who tracks inventory turnover and can spot which wines are slow movers and need to be discounted before they go bad. Luna: That touches on something I've seen: restaurants that treat wine as a museum piece. They buy a case of Barolo, it sits for two years, and by the time they sell it, the wholesale price may have dropped. They've tied up capital and lost potential revenue. Lucas: Exactly. Inventory velocity is everything. I talked to the wine director at Miller Union in Atlanta, and she said they run a weekly report on which wines have been on the list the longest. Anything that hasn't moved in sixty days gets put on a staff recommendation board or gets a discount. They'd rather sell it at cost than let it turn to vinegar. That discipline keeps their average inventory turn at around four times a year, when the industry average is closer to two. Luna: I want to get into staff training, because you mentioned that. I've been to restaurants where the server clearly doesn't know the wine list, and I end up just ordering the second-cheapest bottle out of fear. Lucas: And that's a direct hit to profit. Research from Cornell's hospitality school found that tables where the server makes a specific wine recommendation spend on average eighteen percent more on beverage. The catch is, the staff has to be trained to make recommendations that steer toward high-margin wines without being pushy. A lot of restaurants do daily tastings with the staff before service, just two or three wines, so they can speak from experience. Luna: And that costs money. Time is money. But I guess the return is there if you track it. Lucas: It absolutely is. And here's where we get to the donation part. Actually, you know, this whole topic — taking something that's often treated as a side note and turning it into a real profit driver — that's the kind of talk we try to bring every episode. And if today was actually useful to you, the way these stay ad-free is listener support. Luna: Yeah, it's a small thing, but it makes a big difference for us. If you want to keep getting conversations like this without any commercial breaks. Lucas: It's buy me a coffee dot com slash fexingo. That's it. And a huge thank you to everyone who already has. Now, back to wine. I want to talk about corkage, because that's another area where restaurants are leaving money on the table. Luna: Corkage fees. I have strong opinions on these. Lucas: Most restaurants charge between fifteen and thirty-five dollars per bottle to bring your own. But here's the thing: the cost to the restaurant of serving that bottle is maybe two dollars for the glass, the pour, and the wash. So the margin is enormous, and it's pure profit if the guest doesn't order a bottle from the list. Luna: But some places waive the corkage fee if you buy a bottle from their list. I've seen that as a compromise. Lucas: That's a smart hybrid. But the real opportunity is to embrace BYOB as a way to get customers in the door on a slow Tuesday, and then upsell them on appetizers and dessert. I've seen restaurants in Chicago do a 'corkage-free Monday' where you bring any bottle with no fee. The beverage revenue drops, but the food revenue spikes because people feel like they're getting a deal. Net positive. Luna: So we've talked about by-the-glass pricing, inventory velocity, staff training, corkage. What about natural wine? That's become a huge trend. Is it more or less profitable? Lucas: It's a double-edged sword. Natural wines often have higher wholesale costs because production is smaller and more labor-intensive. But they also command a premium, especially in cities where there's a cachet. The markup can be similar, but the risk of spoilage is higher because natural wines are less stable. You have to move them faster. Luna: So it's a higher-risk, higher-reward play. That makes sense if you have the right clientele. Lucas: And if you train your staff to tell the story. Natural wine sells because of the narrative — the winemaker, the terroir, the lack of additives. If the server can tell that story, the customer feels educated and is willing to pay more. The wine becomes an experience, not just a beverage. Luna: Which brings us back to the data piece. How do restaurants actually track which wines are the most profitable, not just in dollars but in terms of gross profit per square inch of shelf space? Lucas: More and more are using software like BinWise or Beverage Manager that integrate with the POS. They track pour cost, which is the cost of the wine as a percentage of the selling price. For wine, a healthy pour cost is twenty-five to thirty percent. If it's higher, you're either overpaying wholesale or undercharging. The software can flag that. It also tracks which wines are most frequently paired with which dishes, so you can adjust the list to feature high-margin pairings. Luna: That's the kind of specificity I think a lot of independent operators miss. They don't have the time or the budget for a sommelier. Lucas: And that's the gap. But you don't need a full-time sommelier. You can start with a simple spreadsheet: list every wine, its wholesale cost, your selling price, the number of bottles sold per month, and the gross profit. Rank them by profit per bottle. You'll quickly see which ten wines are doing the heavy lifting. Then you can cut the bottom ten and replace them with higher-margin options. Luna: That's a practical takeaway. I wonder how many restaurants actually do that exercise even once a year. Lucas: Not enough. And that's the opportunity. Because the ones that do — they're the ones posting industry-beating margins even in a tough environment like we've seen this quarter in 2026. Wine is a luxury product with a loyal customer base. If you treat it like a utility, you'll get utility margins. If you treat it like a craft, you'll get craft margins. Luna: I think that's the takeaway. One last thing: what about restaurants that don't have a liquor license? Is there a workaround? Lucas: Some are doing partnerships with nearby wine shops. They let the shop deliver bottles to the table, the restaurant charges a service fee, and the shop handles inventory. It's not as profitable as owning your own list, but it's a way to offer wine without the capital investment. I've seen it work in strip-mall locations. Luna: That's creative. So it's not just about markup — it's about finding the right model for your concept. Lucas: Exactly. And that's the thread through all of this: wine isn't an accessory to the meal. It's a profit center that needs its own strategy, its own data, and its own training. The restaurants that figure that out are the ones that survive the lean months.