Hotel Professionals

Wine Pricing Strategies to Increase Sales.

Wine Pricing

Most restaurant managers are fully aware that wine sales are substantially less than their potential.

There are several reasons for this unfortunate state of affairs. Most wine lists are just a listing of well-advertised brands, and have no relation to menu offerings.

A well-planned and attractively presented wine list helps increase interest and sales. Also at the very least all customers must be presented the wine list without them having to ask for it.

Servers by and large are either poorly informed or not at all. Managers rarely take the time to train, which could result in each server selling much more by employing suggestive sales techniques.

Servers will have to be convinced that selling wine can be more profitable for all concerned, while reducing workload. (Serving a bottle of wine requires less time and energy than serving say four bottles of beer, or cocktails). Needless to say all must be well versed in serving wine.

But most important of all, restaurateurs fail to price wines attractively enough to encourage sales.

Most restaurants prefer to compile wine lists featuring products that are readily available from. Wine consumers tend to order familiar brands, hence also know the cost. If the same wine is on the list for four times the cost, consumers instantly know that they are being overcharged. In such instances they may decide to settle for a glass of house wine, or switch to a bottle of beer, or forego consuming an alcoholic beverage altogether.

Obviously, this deprives the restaurateur of a lucrative sale, and often patrons decide to take their business to another establishment after the first experience

Lately, in a lot of restaurants, especially in regions with strict distribution and taxation monopolies restaurateurs increasingly buy brands and wines that are specially imported by agencies and available only to restaurants, or those that clients that buy from them regularly. Some high volume operations even cerate their own brands.

The true cost of a bottle of wine includes inventory expense, safe storage, cost of glassware, and pilferage.

Keeping the list short and renewing it periodically offers some relief from inventory cost and may even attract new clientele.

Wine pricing must be strategically planned. Some restaurants charge

$ 4.00 above cost. This may be regarded as undercharging, but word of mouth and print media publicity generate more good will than people may think. Increasing food sales may well be worth following such strategy.

Where possible and legal some restaurants allow guests to bring their own wine. They charge for glasses and services anywhere from $ 10.00 per bottle up to $ 30.00.

You can also price by using a declining scale mark up strategy:

Cost Mark-up Sales price Contributing margin
$ 8.00 – 10.00 200 % $ 24.00 – 30.00 $ 16.00 to 20.00
$ 10.00 – 15.00 100 % $ 20.00 to 30.00 $ 10.00 to 20.00
$ 16.00 to 20.00 80 % $ 29.00 to 36.00 $ 13.00 to 16.00
21.00 to 25.00 70% $ 36.00 to 43.00 $ 15.00 to 18.00
26.00 to 30.00 60% $ 42.00 to 48.00 $ 16.00 to 18.00
31.00 to 50.00 50 % $ 47.00 to 75.00 $ 16.00 to 25.00
51.00 and up 45 % $ 87.00 $ 27.00 and up

Pricing wine by the glass must be approached somewhat differently.
As losses inevitably occur. You can minimize losses due to oxidation by decanting the contents of partially used bottles into smaller bottles. This will protect the wine for one to two days.

For a 750 ml. calculate, 600ml of servable wine. Every 150 ml. serving of a bottle that costs $ 10.00 should be priced at 300 per cent mark up and sell for $ 7.50.

It is best to offer two or three wines by the glass to minimize oxidation losses. Used bottles can also be flashed with an inert gas to retard oxidation. Sophisticated machines that pour automatic predetermined portions are expensive and not always as efficient as advertised.

Note: sales prices are rounded

Above pricing strategy will make your restaurant very attractive to wine consumers, who generally patronize restaurants regularly and tend to be loyal. This fact alone helps attract more patrons and increases food as well as beverage sales.

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