Photo by Wineemotion USA
For a restaurant to enjoy long term success, a well-developed wine program is essential.
However, more often than not, restaurants fail to maximize the earnings potential of their wine programs.
Understanding your clients and their preferences and then getting the product mix just right are important elements of any wine program. But it’s your pricing strategies that will make or break profitability in the long-run.
Getting the pricing right is more challenging than it sounds.
To optimize wine pricing, it’s important to understand:
Let’s get started.
Photo by Wineemotion USA
The most profitable portion of your entire menu, if properly priced, should be your wine list.
You might have a Michelin-starred restaurant in the perfect location. You might also offer the most amazing wines.
But if you don’t price the wine properly, you’re leaving piles of cash on the table.
In today’s economy, that means your restaurant might not make it to the end of the month.
Photo by Wineemotion USA
It is important to consider how much is too much for your customers, and how low you can profitability be willing to go as you determine pricing.
The general industry standard is to offer 1-2 red and white wines at lower price points. From there, you offer 1 or 2 of each at mid-range price points. The decision to add a third, higher priced offering should be driven by what you know about your clientele.
There are many industry benchmarks for pricing:
Your reputation and brand image are critical considerations when pricing your wine offerings.
If yours is a casual establishment, customers expect reasonable and affordably priced wine. You are therefore limited in the choices you can make.
However, establishments that are more upscale or are known for serving unique high-quality wines can charge more. This is also true for those establishments that are especially innovative.
For example, Bodvino in Boise, Idaho has 18 wine dispensers from Wineemotion, allowing them to offer a self-guided wine experience with 144 unique wines on tap. Customers purchase a prepaid card, insert it into one of the machines, select their wine and then choose a one-, three- or five-ounce pour. On Tuesdays, Bodvino even gives customers $5 every time they recharge their card with $20.
Of course, it’s possible to adjust your image and roll out a new strategy in order to increase the price point at which you are operating. When making a change, consider how you can maximize the upper range of your pricing:
Selling wine by the glass is far more profitable than selling wine-by-the bottle.
Traditionally, the only wines on a restaurant’s by-the-glass program were those the restaurant knew would move quickly. The reason for keeping the by-the-glass menu so limited was to avoid spoilage costs and to keep a line of already opened bottles out of the customer’s sight.
However, today’s wine consumer expects more options. At higher-end restaurants, they expect access to by-the-glass options for purposes of food and wine pairings.
The good news is that with advances in technology, restaurants can now offer more wines by the glass, avoid spoilage and opened bottles sitting on or behind the bar.
How, you ask?
Upon opening a bottle of wine, you know that the oxidation process starts right away and can change the flavor of the wine quite rapidly. Without a focus on wine preservation, this issue can quickly eat into your profits. Wineemotion’s wine dispenser systems solve this problem by preserving the wine taste and aroma for up to 30 days - transforming waste into profits.
When a particular bottle of wine doesn’t move as expected, many businesses simply remove and replace that bottle. However, you have likely put a good deal of time and effort into choosing that bottle. It’s very possible that you chose the right wine, just the wrong price point.
Because wine purchases are incredibly price sensitive, it’s important to commit to being flexible and trying a different approach from time to time.
Photo by Wineemotion USA
Ultimately, wine pricing is a dynamic and interactive process.
Collect and analyze as much data as you can in order to gather insights about your consumers and their preferences.
If you make reviewing your wine pricing strategy a regularly scheduled operating procedure, you will optimize the profit potential of your wine program and ensure the success of your business – in good times and bad.