Pricing Your Restaurant's Wine List
Maximize profit from a well prices wine list
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There's no better way to heighten the enjoyment of a great meal than with a well-paired glass of wine. From a restaurant's point of view, not only is the wine list a way to enhance the dining experience, it's a key source of high profits. Alcoholic beverages, including wine, easily provide more profit than any food items on the menu. Pricing a wine list is a bit of a balancing act; you must get the pricing right to maximize sales and profits while pricing fairly by industry standards. Simultaneously, you need to ensure your establishment offers something for customers all over the wine-appreciation spectrum.
Dividing the Wine List
Patrons with modest or no wine knowledge take certain cues from the prices on your menu. However, their first cues come from the division of your wine list. So, before pricing, determine how to divide your restaurant's wine menu. The decision is largely a function of the size of the wine list and how centrally it figures into your brand. A small list is typically broken down into categories including reds, whites, blushes, sparkling wines, and dessert wines. Somewhat larger selections can include sub-categories for country of origin and/or grape type. More sophisticated wine lists often break sections down further by region.
Pricing by Industry Standards
Restaurants generally mark up a bottle of wine from 200 to 300 percent over its retail sales price. You can therefore reasonably price a bottle that retails around $20 at $60 and $80. For bottles offered by the glass, divide your bottle list price by the number of glasses you get per bottle to determine your price by the glass. The generosity of restaurant pours varies widely, but a 750 milliliter bottle usually provides about 6 glasses. It is standard practice to mark up the most popular wines on a list closer to 300 percent, while marking up less impressive sellers closer to 200 percent.
Making Special Considerations
The mark up sometimes exceeds 300 percent over retail value on specialty wines or rare and particularly expensive bottles. Such wines appeal to connoisseurs with considerable disposable income for indulgences. Pricing special bottles at 400 percent over retail value is not uncommon. However, this isn't necessarily the smartest business practice, particularly if your restaurant faces tough competition for affluent wine lovers. If your wine list is a notable selling point for your establishment, there may be more sales and profit in smaller mark ups on specialty bottles. The people who order these bottles can easily spot a great deal. Making high-value wines available to the customers who love them at uncommonly low prices can be a powerful marketing tactic.
If you find certain wines aren't selling, cut their prices before discontinuing them. Lower profits are, of course, still profits, and worth more than no sales and no profits. Moving bottles for 100 percent over retail value is still an excellent profit, even if it's lower than the standard. Just keep an eye on sales to make sure the less profitable bottles don't cut into higher-profit sales. Cheap offerings are also an effective way to encourage sales among patrons who don't know much about wine or who are hesitant to raise their bill with extras.
Written by: Jon Mohrman