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Wine Pricing: Strategy, Profitability and Adjustments | Sommelier Business

Right pricing strategy for your wine list is absolutely vital for the long-term success of your restaurant.

Getting the pricing strategy right for your wine list is absolutely vital for the long-term success of your restaurant. By now, we’ve all heard stories about Michelin-starred restaurants in cities like New York that almost went out of business just because they couldn’t sell enough wine. It’s important to get the pricing right – 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.

Strategy
Thus, the first thing that you will need to do is develop an overall pricing strategy. In many ways, this is determined by the reputation and brand image of your restaurant. For example, if you are a fast-casual dining establishment, you are limited in how much you can charge for a glass or bottle of wine. And if you want to be known as a midweek restaurant spot offering high-quality wines available to customers at very attractive prices, you also lose some of your flexibility. You may want to charge a higher price, but by doing so, you might be losing some of your core clientele.

When it comes to overall strategy, you will need to consider both your wine by the bottle program and your wine by the glass program. As a rule of thumb, the only wines appearing on your by the glass program should be those that you are very confident about selling. For that reason, most restaurants skew heavily in favour of popular red wines like Cabernet Sauvignon and popular white wines like Chardonnay.

That basic strategy might work for a “neighbourhood” or fast casual restaurant, but will not work for a high-end restaurant where there is much more of an emphasis on food-wine pairings. For example, in addition to a house Chardonnay and a mid-priced Chardonnay, you will be expected to offer other white wines in your by the glass program, such as Pinot Grigio. The good news is that, as a national trend, there has been a renewed emphasis on shorter, pared-down wine lists. That has made pricing much easier, simply because the whole process of ordering and replenishing wine is simpler. Moreover, all of the “hidden” costs of a wine program – such as the relatively high cost of storage – are reduced with fewer wines on the wine list.

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Wine Pricing: Strategy, Profitability and Adjustments.

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