How To Calculate The Price Of Wine
Pricing the sale of wine in restaurants is a very important marketing tool. Its fundamental purpose is to design a pricing structure that maximises the return on investment. In this sense, the profit margin will depend on the:
- Calculation according to the purchase price plus the service price. For this purpose, wine sales are made in different ways, by the bottle and at the same time by the glass. It is important to bear in mind that product selection and pricing go hand in hand.
- Each of the aspects described in the previous segment influences the final retail price. For example, if the purchase price of the wine from the restaurant is around 5 , the wine could be sold on the wine list for between 14 and 16, which is considered to be a quite adequate price. However, if it is offered at the wrong temperature with poor quality glasses, this price could be quite exorbitant for the customer.
- Also, it should be considered that a restaurant that invests in a high-end bottle of wine should calculate its profit according to the investment. Not only in the above services, but also the cost of maintenance of a wine chamber must be considered , to avoid the risk of the wine chamber being damaged by not being kept properly until a customer orders it.
Wine By The Glass Price Formula & Costs
Beverage programs need three things: restaurant sales, a good pour cost , and a decent profit margin.
Wine by the glass programs help with all those restaurant business KPIs. They’re quite profitable.
If you get the pricing right.
But that can be tricky. You’ve gotta factor in sales trends and cost of goods sold.
Here are some tips on how to get your WBTG program contributing to your bottom line.
See Exactly Where To Price Wine By The Glass
Ah, the sacred wine by the glass list… In many restaurants the glass list is responsible for up to 75% of all wine sales. With gross margins on glass pours;often exceeding 65%, wine by-the-glass can end up accounting for an entire restaurant’s profitability.;
This is true liquid gold for a full service restaurant and having a solid offering of wines by the glass to offer your customers can be the difference between closing your doors or raking in lots of money.
In a recent Eater article on New York restaurants increasing their prices, Ryan Sutton reported on;Atera, a popular two;star;Michelin restaurant, that was struggling to break-even because they weren’t selling enough wine. According to;maitre d Matthew Abbick:
As some time went on, we realized we had not quite anticipated just how many of our guests would opt for no beverages. And month after month, we saw that wine sales were the only thing bringing us within reach of a break-even point. It was a sad reality, that if every guest of Atera ordered the tasting menu and a temperance pairing, we would close.
While the cure for Atera was to raise their menu prices, a less wallet-invasive cure for restaurants is;to increase the number of guests who order wine. This is known as the incidence rate.;
So what’s the;best way to increase the number of guests who order wine? Have a wine list, and in particular glass pours, that satisfy what guests are looking for at the prices they want.
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Average Cost Of A Bottle Of Wine: Retail
Above are the commonly-accepted market segmentation of retail wine and their average retail price. The average cost of a bottle of wine depends heavily on the segmentation.
The breakdown of average price of wine:
- Jug wine. The average wine price of jug wine is just below $5. Jug wines make up about 12% of total retail sales.
- Popular-premium. The average price of popular table wine is between $5 and $10. This type of wine makes up 33% of total retail sales.
- Mid-premium. The average price of popular table wine is between $10 and $15. This type of wine makes up roughly 8% of total retail sales.
- Super-premium. Super premium wines have an average price of between $15 and $20. These make up around 8% of total retail sales.
- Luxury. Luxury or ultra-premium wines have an average price of over $21 and make up 7% of retail wine sales.
The above average prices of wine are based on 750ml bottles and adjusted for 2020 dollars.
Now, wine price at restaurants is another story.
Wines That Crush It By The Glass
Sommeliers reveal their top-selling BTG poursfrom a Savoie sparkler to a crowd-pleasing Rioja
Andrew Schawel pouring glasses of Baron de Brane Margaux at Bullion.
Alisha Blackwell-Calvert says Reeds American Table once sold a record number of 30 glasses of dArenbergs Hermit Crab in a single service.
Carrie Lyn Strong says that Casa Lever sells four to six cases of I Clivi di Ferdinando Zanusso Vigna 80 Anni Malvasia Collio by the glass per month.
The Nickel & Nickel Quarry Cabernet Sauvignon goes for $35 a glass at EPIC Steak, says Petra Polakovicova, and its a winner with guests.
Matt Stamp of;Compline Wine Bar and Restaurant.
By-the-glass wines consistently drive revenue in any restaurant program, but a little creativity is required when it comes to offering exceptional value to guests. Finding the wines that will sell like wildfire is the name of the game. SevenFifty Daily asked 20 U.S. sommeliers and wine directors to name a by-the-glass pour that they cant keep in stock. For some, off-the-charts sales might mean that they run through one case a week; for others, it might mean 10 times that much. But staff enthusiasm, supreme value, and harmonious pairings can elevate BTGs to MVPs.
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Ask A Sommelier: Are Wines By The Glass A Good Deal
There’s always that moment at a restaurant: should you order wine from the by-the-glass list, or spring for a bottle? Go for a few different glasses or commit? Sometimes it’s hard to tell whether the wines available by the glass are a good or bad deal. Are they just cheap bottles marked up to the maximum? Are they wines that are going to go with the food you ordered?
We asked sommeliers from around the country for their advice: should you order wine by the glass? How are these wines selected and are they a good value or a bad deal?
Here’s what they had to say.
“I rarely order wine by the glass in a restaurant. Even at good joints, the wines by the glass are often revenue centers, or afterthoughts. I can’t tell you how many times I’ve been asked to consult on a restaurant and tasted through the wines by the glass only to dump out half or more of them. Many restaurants don’t encourage the staff to taste the wines they are serving and that’s a huge mistake because wines don’t last forever. One of the first places I worked even went so far as to switch the wine that was ordered with the cheapest wine they had insisting the guests wouldn’t be able to taste the difference! In a well curated program, the wines by the glass should be selected for the menu and for the guests.
“I would say wines by the glass are a good deal if you plan to only go for 1 or 2 glasses max.”Adrien Falcon
Wine Bottle Price Strategy For Bars And Restaurants
There are a few things to consider when hammering out your wine bottle price strategy. You need to consider profit, sure. But you also need to consider what you can get away with.
That involves making some observations about your concept and clientele. Then youâll get a good idea of how to price a bottle of wine in a restaurant. Thatâs because it will determine the flexibility you have when setting markups.
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/02/2019 Understand The Metrics Get The Product Mix Have An Apt Pricing Strategy Replenish And Youre Good To Go
A successful wine program is a key to generate a profitable revenue stream for any on-premise establishment, such as a restaurant or wine bar. Instead of focusing only on sales of wine bottles, though, it is just as important to focus on optimizing by-the-glass wine sales. The two are often correlated, with strong by-the-glass sales often leading to strong by-the-bottle sales. So what steps should a wine director be taking in order to develop a profitable by-the-glass program?
Factors Affecting Wine Bottle Price
Why is this so? There are numerous factors that go into determining wine bottle price. Letâs take a look.
- Wine bottle cost. The most obvious and impactful factor affecting wine price is wine cost. Because retail and restaurant markups are first based on the wholesale price. The cheaper companies acquire their wine, the cheaper theyâre able to price it.
- Operational and overhead costs. Restaurant operations arenât cheap. Neither are overhead expenses. And they also vary among restaurant concepts and types. The more expensive it is to run a business, the higher the wine markups may be to compensate for it. On the other hand, the lower the restaurant expenses, the lower wine can be priced.
- Labor cost. Similar logic here as with operational costs above. Businesses have to make up for large, expensive workforces. Often that takes the form of higher prices. Wine prices, in this case. And the opposite is also true. A small cafe with 3 employees may have some downright reasonable wine bottle prices.
- State and local laws. The tax rate for alcohol varies between states. Washington state, for example, has the highest alcohol tax rate at $32.52 per gallon. While Wyoming and New Hampshire effectively have no tax on alcohol. This also affects wine price.
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What Criteria Should Be Taken Into Account When Setting The Price Of Wine In A Restaurant
In general, when looking at a wine list we can notice that its final retail price is higher than that of a shop. Although it is quite possible that a restaurant is abusing prices, other factors also play a role:
- Temperature: According to the type of wine , restaurants offer bottles of wine at the right temperature for consumption. All this, guaranteeing that it is done in the right way and with the right standards to maximise the experience and enjoyment of each diner.
- The glass: A good wine should be served in a large wine glass, made of high quality glass, which guarantees a superior enjoyment of the drink. Only a good restaurant, aware of these good practices, will not overlook this element.
- Service: Its not just about drinking wine, its also about choosing the best. That is why it is important to receive the best advice from a specialised staff, who will guide you on the best option, how to open the bottle of wine and above all, how to decant it.
- Investment: To guarantee all the elements described above, restaurants must make an investment. Not only to buy the best wines, and to have different options to offer you. Also, to offer a professional service that matches the wine, with the right staff and resources.
- Keeping an updated wine list will allow the waiter to offer different options to choose from to each customer.
The Problem With The Pour
When you buy a bottle of wine, theres no question as to how much youre getting. You pay for and receive the ENTIRE bottle. When you buy a glass, on the other hand, you give the restaurant control over portion size and value. While a six-ounce pour is considered standard, it isnt unusual for bars and restaurants to lower that to five ounces per pour.
Limiting pours to five ounces means they can increase profits by getting five glasses out of one bottle of wine instead of the typical four. When you also factor in the markup price, this can be very frustrating to learn. Its better to buy the bottle, so you can determine how big you want your glasses to be without losing any value.
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Darenberg The Hermit Crab 2016 Mclaren Vale Australia; $10
Served by Alisha Blackwell-Calvert, beverage director, Reeds American Table; Maplewood, Missouri
A partially barrel-fermented blend of Viognier and Marsanne, The Hermit Crab is crafted in a style familiar to New World Chardonnay lovers, with notes of fruit and oak, but it can also introduce drinkers to these lesser known varieties. Alisha Blackwell-Calvert, the Reeds sommelier, says real magic happens when the wine is served with chef Matthew Daughadays exceedingly popular mushroom lasagna. This wine crushes it on its own, Blackwell-Calvert says, but paired with the right dish, its true potential shows. The record number of glasses of The Hermit Crab sold in one service stands at 30thats a total of six bottlesbut Blackwell-Calvert notes that the restaurant typically runs through two bottles a day.
Wines Available For Sale Fall Into Two Categories:
Wines by the glass
The glass of wine that you order can be ordinary or finer, inexpensive or higher-priced, depending on the restaurant. In some restaurants and in bars, you can buy an anonymous glass of wine called the;house wine.;House wine offerings usually include one white and one red , and these wines can be purchased by the glass or sometimes in a carafe. You get a restaurants house wine when you simply ask for a glass of white or a glass of red. Many restaurants today do not offer a standard house wine, opting instead to give customers a wider choice premium wines by the glass. These wines by the glass are generally better quality than standard house wines. Theyre usually also available by the bottle.
Wines by the bottle
Buying an actual bottle of wine is the norm in most restaurants. You usually choose the wine from a wine menu or wine list. Standard, or regular, wines are available by the bottle from the restaurants;standard,;or regular,;wine list.;These wines can range from moderately-priced to luxury offerings, depending on the restaurant. Reserve wines are those wines featured on a special wine list, sometimes called a;reserve wine list. They include older or rarer wines, usually very expensive.
Just a glass, please
- Ordering premium wines by the glass is a fine idea, especially if you want to limit your consumption or if you and your guests want to experiment by trying several wines.
Choosing from the bottle list
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Lackner Tinnacher Morillon 2017 Styria Austria; $14
Served by Laura Staley, wine director, Island Creek Oyster Bar; Burlington, Massachusetts
Katherine Tinnacher is a badass vintner, says Laura Staley, the wine director at Island Creek Oyster Bars Burlington, Massachusetts, location. One of my biggest battles has been broadening my guests idea of how Chardonnay can translate in the glass. Tinnachers Morillon is elegant and mineral-driven, much in the style of Chablisjust at a more approachable price point. The wine pairs perfectly with the coastal cuisine of the restaurant.
Understand The Metrics Of Your Wine Program
The more you understand the numbers behind your wine program, the better able you will be to create a successful by-the-glass program. At a minimum, the wine director of a restaurant needs to be putting together key data points, metrics, and financial information in order to see where the restaurant should be focusing in the future. The starting point, of course, is simply tabulating how many total glasses of wine you are selling each week, and then breaking down that information with finer-grained analysis. For example, what is the split between red, white and sparkling wines? What are your bestselling varietals?
As you begin to analyze the data, youll probably start to notice that by-the-glass wine sales follow the popular 80/20 Rule. In other words, 80% of your wine sales are generated by just 20% of the wines in your by-the-glass program. In practical terms, that means you might only sell a few glasses of a white wine like Riesling per week and many glasses of a white wine like Chardonnay. If one of your top-selling wines is a house Chardonnay, that might be a strong signal that you can introduce a slightly-higher priced Chardonnay as an additional option on the by-the-glass list.
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Proper Way To Hold A Wine Glass
To understand the proper way to hold a wine glass, first, you need a glass that suits your style. Wine glasses come in several shapes and sizes. Some are round, some are short, and some are tall and slender.
For example, a stemless glass is a different shape than a full-sized glass. The best shape is the one that accommodates your hand and wrist. You may need to experiment with a few wine glass shapes before you find one that works for you.
Making Wine Lists 2 Options For Calculating The Price
The most important thing when creating a wine list is that it brings a great improvement to the sales of your wines. Taking into account the location of the restaurant, the type of food offered and the purchasing power of the customer.
This menu should present the type of wine , origin or production area, the name of the wine and winery, the grape variety, the price per bottle or glass. In addition, it must have a manager who takes into account the stocks of the wines and who is a good connoisseur.
Therefore, it is very opportune to offer you 2 options to calculate the price of wine in a restaurant:
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