Growler USA – Setting High Standards in Beverage Management

July 13, 2016 § Leave a comment

Our readers may have taken note of a recent FSR article on Growler USA, a beer-centric chain boasting 100 tap lines and dedicated to serving  craft beverages (including beer, cider, mead and, yes, some wine). According to the article, the chain has plans to expand from 3 to 35 units by the end of 2017. We should note that this concept has precedence with World of Beers, which started with one location in Tampa, Fl in 2007 and is planning to grow to over 100 units by the end of this year. Additionally there are numerous growing regional chains offering a dozen or more drafts and many more craft brews by the bottle. The ones we have surveyed have partnered extensively with local and regional craft brewers and provide vital opportunities for endorsement and consumer trial.

So what compels me to draw your attention to Growler USA? First, they have an unparalleled commitment to serving a superb product, equivalent to a craft brewery tasting room. Second, they are seriously dedicated to providing consumer education, with all of their bartenders qualifying as Cicerone Certified Beer Servers. Third, they are devoted to supporting local, innovative craft beverage producers. Finally, and this is key, every Growler USA location provides a continuously updated list online of all their 100-plus selections with prices, something offered by virtually none of the hundreds of chains and independents that Winemetrics currently surveys. This means that a consumer can be pretty certain that what is on the website is available on tap. I know this is a relatively simple process from a technical standpoint, yet when it comes to craft beer selections, most chain websites merely state, “Ask your server about our selection of craft beers” or words to that effect.  Apparently, informing potential customers about what is being served and at what price, by location, is too much work for the average chain IT department. In fact, there are an increasing number of chains that provide no beverage information on their websites and even fail to provide prices on their printed menus! (More on that issue in a future post).

Congratulations to Growler USA; I hope it prospers and reserves some of its taps for innovative, regional wine producers.

 

(Note: Winemetrics has no relationship whatsoever with Growler USA or anyone associated with the company)

Eureka! The Future of Upscale Casual Dining?

June 3, 2014 § 2 Comments

I recently visited the San Luis Obispo location of a small, 10-unit restaurant chain based in California named Eureka!. And yes, like Archimedes, I do believe I found something extraordinary. Eureka! has a cutting-edge beverage list with an artisanal and local focus for its wine, beer and cocktails. The food focus is local and affordable. Only hormone and antibiotic free beef is used in the gourmet burgers which range in price from $9-$12; nearly all entrees are under $20 (their Hangar Steak is $23.50).

The beverage program, however, is what distinguishes Eureka!  By my count there were 33 draft beers available, with not a single mass-market beer among them. The taps were divided into 19 ‘tried and true’ offerings (Lagunitas IPA, Allagash White, Stone Ruination) at $5-$9 and 10 Rotating Taps that offered more expensive ($6-$11) esoteric drafts. The 10 offerings of bottled beers were mostly rarities priced over $20/bottle with the highest-priced offering $65.

The cocktail list remained true to concept with 27 artisanal spirits and 9 Classic Cocktails. The focus here was on the cocktail ingredients, not the mixology. Again, the focus was local (California) and no mass-market brands were listed on the drink menu.

Eureka!’s wine selection was the smallest segment of the beverage list, just 14 by-the-bottle and 10 by-the-glass offerings. Wines were primarily from the Central Coast area but far from artisanal. Again, no mass-market brands made the cut, but the selections were far from cutting edge.  All the offerings were from mainstream varieties (half of the selection was comprised of Chardonnay, Cabernet Sauvignon and Pinot Noir); there were no stand-out rarities. By-the-glass offerings ranged from $6-$12 and bottles from $22-$69. It appeared that wine was placed on the menu merely to appease the occasional wine drinkersthat might happen to stumble in. This assumption is reinforced by the fact that Eureka! offers both a ‘build your own’ beer and spirit flight yet no such option is offered for wine.

The only flaw in Eureka!’s execution is there is no way to see how inventive and extensive its beverage program is as no drink lists are posted on its website. (See our post “How Restaurants Undermine Their Beverage Programs”.

Evidence that the Eureka! concept resonates with Millennials can be substantiated by the success of similar concepts around the country. Umami Burger, Plan B, Slater’s 50/50 and Square 1, among others, follow the local, artisanal, beer-centric model and are adding new locations at a rapid pace.  In all of the gourmet burger chains I have visited, wine plays a secondary role, yet I doubt there is a more burger-friendly beverage on earth than a brambly, full-bodied Zinfandel. Perhaps it’s time for the wine industry to address this gap in its on-premise coverage.

(Note: Eureka! is not a client of Winemetrics, nor do any of its employees have an affliation with anyone associated with our company. Also, Eureka! has not been nor will it be solicited for any future compensatory relationship with Winemetrics).

Educating the Wine Consumer?

November 22, 2013 § Leave a comment

In the over 30 years I have been employed in the wine industry, I have often heard sommeliers and beverage directors refer to their role as wine educators.  In some cases, this claim is valid. In those establishments, the wait staff is familiar with the wines offered and the wine list provides flights or tasting for exploration, with both well-known and esoteric producers in the selection. Additionally, the wines are presented in a user-friendly, unpretentious manner.  However, based on three decades of experience, I would say that restaurants providing all of the above comprise less than 1% of all restaurants. The environment for wine appreciation on-premise has, I’m afraid, taken a turn for the worse.

In Winemetrics most recent survey, we recorded a drop in wine selection size as well as wine list features such as flights, tastings and half-glasses. Also, we have witnessed a decline in the number of regions and varieties offered on wine lists, limiting the opportunities for experimentation and education.  Research from the Cornell Hospitality Research Center indicates, categorically, that larger lists sell more wine (up to 150 entries), but I think there may be a rationale in the restaurant business that a smaller list will save money on inventory and wine drinkers will order what is available.  The reality is that smaller lists sell less wine because of a lack of choice, and lack of choice inhibits purchases.  Wine consumers, in the face of limited (and/or overpriced) wine selections, will order a glass instead of a bottle or choose a craft beer or cocktail in lieu of wine.  While have have been a wine drinker for my adult life, I will gladly drink a craft beer or cocktail if the wine lists offers no viable options. I know Millenials feel this way, in fact, from the behavior I have observed from countless Millenials in my restaurant visits throughout the country. For the most part, Millenials ignore wine lists and focus on cocktails and craft beer on-premise(and in retail stores).  The only way restaurants will sell more wine is to reverse the downsizing and homogenization of their wine selections.  This current strategy of downsizing wine lists as a cost-saving maneuver will result in continued loss of wine revenue. The logic is, wine sales are down, so let’s reduce inventory to cut costs, these reductions result in further revenue losses, triggering additional inventory cuts.  In the end, the wine list becomes an afterthought, as it is in many casual restaurant chains, even casual steakhouses, and no one interested in wine will order from it or more importantly, ever dine in that chain again.

On-Premise Wine Strategy: Field of Dreams or Moneyball?

February 27, 2013 § 1 Comment

On-Premise Wine Strategy:  Field of Dreams or Moneyball?

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“If you build it (they) will come”. Probably everyone reading this newsletter recognizes that quote from the 1989 classic movie “Field of Dreams”.  This baseball fantasy movie’s premise is that fans will miraculously find a magical ballpark in the middle of an Iowa cornfield by word of mouth (or a spiritual connection).  That seems analogous to the wine program management of some chain restaurants I have observed.   The restaurant creates a wine list (possibly winning an award from a leading wine magazine) and the result is wine-loving customers beating a path to the door. While I may be exaggerating expectations, Winemetrics research indicates that most chains are leaving much of their revenue to chance. Most chain restaurants do not include key features that can raise wine revenue.  Actually, running a profitable wine program is less about Field of Dreams and much more like Moneyball (for those unfamiliar with the book or the movie based on it, a brief explanation follows).

(The following is from Wikipedia)” The central premise of the book and movie, Moneyball , is that the collected wisdom of baseball insiders over the past century is subjective and often flawed. Statistics such as stolen bases, runs batted in, and batting average , typically used to gauge players, are relics of a 19th century view of the game and the statistics that were available at the time. Rigorous statistical analysis had demonstrated that on-base percentage is better indicator of offensive success. This observation often flew in the face of conventional baseball wisdom and the beliefs of many baseball scouts and executives. “

Most beverage directors and sommeliers have mindsets similar to those of baseball insiders, they use subjective, often flawed, criteria for selecting and pricing wines for their lists. Fine dining lists often eschew popular, mainstream products that have wide consumer appeal on the grounds that it doesn’t meet a certain level of exclusivity and reflects poorly on the sommelier’s vision. Conversely, casual dining chains often include only inexpensive, mainstream brands, neglecting to add ‘trade-up’ wines for their more knowledgeable customers. Logic would dictate that to improve wine sales per customer, a balanced approach regarding mainstream and esoteric brands and varieties should be employed.  As Moneyball illustrates, the major goal of a baseball team is winning and the players’ on-base percentage (i.e. runs) is the one parameter that has the very highest correlation with victory.  The primary goal of a wine list is to maximize wine revenues

The major goal of a wine program is making money (at least that is what most restaurant owners want). Yes, it has to complement the food and be appropriate for the demographics of its customers, but those can all be achieved without sacrificing revenue. The on-base percentage equivalent for wine lists should be average wine revenue per customer.

AWRC = Price total wine sales – Cost total wine sales

Total # Customers

Essentially, this formula provides average revenue per customer (AWRC) that your wine list generates, and it is the most vital statistic for a wine list program. Everything else is extraneous. If your AWRC is high, then your list has opportunities for both the affluent wine aficionado and the average glass of Merlot drinker. It has size options that adapt to the dining regime of the customer e.g. small plates/wine tastes or flights or big parties and large format bottles) If the AWRC is low then your wine program is not addressing your customers needs. All the 90+ ratings, the obscure, exclusive small-case lots that sell a few bottles a year, the Wine Spectator Awards, the acronyms behind your sommelier’s name etc. don’t mean anything unless they maximize the AWRC.  Logic dictates that if an establishment’s wine list offers nothing appealing to an average wine drinker, they will often simply turn to beer or cocktails or maybe just nurse a cheap glass of wine throughout dinner. (While I am personally very adventurous while dining alone or with my wife, when dining with friends who are not, I am not willing to take a chance)

I should mention that to the restaurant’s management, it is not wine sales that are important, it is beverage sales, which provide the highest margin of profit for the house. In general, the ownership doesn’t care whether those revenues come from spirits, beer, wine or non-alcoholic beverages. However it should matter to those of us in the wine profession. As I have mentioned in a previous blog, cocktails and craft beer are competing aggressively for wine’s share of beverage revenues. So we in the wine profession have to ask ourselves: Is it worth alienating a portion of wine-drinking customers for the purpose of having a ‘pure vision’ of a wine program (i.e offering wines that even the fairly knowledgeable wine consumer will not recognize).

Let’s do some simple math based on 2 drinks per person. For the average craft beer, that would be $6 (times 2) = $12, for the average cocktail $8 (x2) = $16 and for the average bottle of wine ($44), split among 2 people (2, 6-ounce glasses) = $22.

There are proven methods that will increase wine revenue such as half-glasses/tastes, wine entries on the food menu, menu-based wine recommendations (based on research done by Cornell University’s Hospitality Research Center) and, of course, having well-trained, attentive servers who can provide lucid, concise explanations of individual wines. Unfortunately, according to Winemetrics most recent survey a minority

After completing my most recent tour of in major markets across the country, I was struck by how little progress there has been in chain wine programs in the over 30 years I have been in the wine business.  Yes, wine lists have gotten larger and there are now more offerings by the glass and a few new varieties have become popular. But wine’s progress in the past decade on-premise appears downright anemic next to the strides cocktail and craft beer have made during the same period.  This point was driven home during my visits to a number of casual dining chains whose beer and cocktail lists individually rival the size of their wine selections.

The bottom line is that restaurateurs will follow the easy money. Wine by-the-glass programs are expensive to maintain, given the training and old inventory rotation costs.  Cocktail and beer programs are inherently less costly and can be varied on a very frequent basis.  It is up to the wine suppliers to protect their turf on-premise; the first thing they need to do is take an analytical approach to their on-premise presence. More on this later.

Wine Promotions We’d Like to See

February 9, 2011 § Leave a comment

Certainly, I don’t get out all that much. I do visit about 200 restaurants a year and review the menus and wine lists of hundreds more, but that is really just scratching the surface of the tens of thousands of on-premise accounts offering wine. Apologies in advance to all of the wine-oriented restaurants for whom these recommendations are old news.  Please feel free to use these ideas gratis, or if you know of a restaurant doing imaginative promotions that we can report on, please notify me at lists@winemetrics.com

Wine Promotions We’d Like to See

By-the-Glass Promotions

  1. Precious Pours Promotion – offer 3 2 oz. pours of  wines priced over $60 on your list for $20
  2. Taste(s) of the Week – each week offer a special flight of wines from a particular region or variety. This would be a good way introduce new items on your wine list.
  3. Wine Treasures – on a slower weeknight, offer to pour an iconic wine (e.g. Opus One, Caymus Special Selection, etc.) for $20 or less per taste with dinner – one taste per customer.

Alternatives to the Wine Dinner – winemaker dinners build brand awareness and customer loyalty but require an investment in both time and money by the restaurant and the supplier – here are two low cost alternatives.

  1. Wine 101 Happy Hour
    Winemaker dinners require an investment in both time and money by the restaurant and often the wine company. Tastes of wine possibly accompanied by hors d’oeuvres lead by a supplier/distributor rep (you don’t need a winemaker or supplier rep for this one) Use a quiet section of the restaurant for a half- hour tasting and discussion. Educational, fun and affordable.
  2. The Self-Guided Farm-to-Table Small Plate Dinner
    Put together a selection of wines and small plates that comes with its own literature This will give your customer more in-depth information about your suppliers (farms and wineries) and build your reputation without the expense or formality of a farm-to-table dinner (3 small plates with one flight of 3 wines <$40)

Other Promotions

  1. Gather input on your wine program by offering a non-transferrable coupon for a free glass of wine or bottle discount in exchange for filling out a short survey on wine preferences. This will bring that key customer back for another visit while providing you with key information to manage your wine selection.
  2. Wine Upgrade Night – Buy a bottle of wine with dinner and get upgraded to a better, more expensive wine of the same variety.

 

Ten Steps to Improving Wine List Profitability

October 14, 2010 § Leave a comment

Key Features Offer Greater Wine Profits

(*based on research published by Cornell’s Center for Hospitality Research)

  1. Post your wine list on your website with prices
    Your customers should have the option of seeing your wine list before committing to making a reservation.  In an upscale casual restaurant wine for a party of two core wine consumers can total 20-50% of the final tab; in the case of a fine-dining account with special bottles it can be 50-100%

  2. Put at least your BTG but hopefully part or all of your BTB list on the food menu*
    This is a no brainer. Having the by-the-glass selections or the entire wine list allows your customers to view your list as soon as they sit down without waiting for a wine/drink list to be provided. Having a wine selection on the menu also permits your more sophisticated diners to easily match their wine and food selections.
  3. Add multiple BTG (by-the-glass) serving sizes especially half-glasses*
    Having multiple glass sizes, especially half-glasses, is one of the best ways to increase wine list profitability.  A diner may wish to have atwo different wines with his/her without having to drink two full glasses. A half glass with an appetizer and a full glass with an entrée can provide that experience without the cost of 2 full glasses or bottle. Also, for some diners, a 5-6 ounce pour may not be sufficient for a hearty entrée and a half-bottle or bottle too much; a  9 ounce glass might be just right. According to the Cornell Research tasting portions increase sales by 18-47%, and if you think tasting portions are only for upscale restaurants, this study was executed in a casual seafood restaurant with a 20-item wine list.
  4. Add flights or, better, offer a build your own flight option*
    Flights are usually a group of three or four 2 to 2.5 ounce tastes. They vary from the mundane to the exotic and are generally tailored to a restaurant’s clientele. It may be prudent to let the customer create his or her own flight, an approach that seems to have worked well for P.F. Chang’s China Bistro.
  5. Add half-bottles
    Half bottles enhance a wine list only if they meet two criteria. They must be fairly priced and they should be well-known products. A diner who, prior to the recession, might splurge on a well-known $50 Pinot Noir, may still go for a half-bottle of that same wine for $25-$30.
  6. Price your wines fairly, or else.
    Nothing will infuriate a wine aficionado more than an egregiously over-priced wine list. The restaurant that commits this affront either does so out of ignorance or is trying to put one over on an unsuspecting public. Knowledgeable wine consumers are, if anything, a savvy group of consumers and they are a restaurant’s most valuable customers. They understand that an aged, USDA Prime ribeye steak should cost more than a regular T-bone on a menu, but they don’t understand why one restaurant would charge $60 for the same wine another is offering for $40. These consumers know what their favorites wines cost at retail and so are aware when are being gouged.  The 2.5 times retail markup is usually a safe standard.
  7. Expand the size of your wine list, especially if you have a casual or upscale-casual restaurant.*
    According to the Cornell research, this works up to 150 items. A general rule of thumb, a casual-dining restaurant with less than 26 wines should add selections as should an upscale-casual dining restaurant with less than 60 wines. Those are the average number of items for each segment from our 2010 Chain Restaurant Wine Distribution Report.
  8. Add well-known, higher-priced wines to your wine list or even add a reserve section to allow wine consumers to trade up.*
    With consumers trading down from fine dining establishments to upscale casual and casual dining venues, it is very likely those with ‘trade up’ wines will reap greater profits. Wine aficionados may be willing to save a few dollars on a meal but will not be commensurately reducing their wine choices. More likely, the bottle purchase will become a half-bottle or glass. Restaurants with the selection to attract these consumers will be rewarded.
  9. Take the $ signs off your wine list.*
    Very simple, according to the research, it works.
  10. Provide recommendations either via your waitstaff or, if your restaurant format permits, on a table tent. *
    According to Cornell’s research, “a table-tent promotion of five wines increased wine sales of promoted wines more than promotions recommending a single wine or three, spurring a 39% increase for the five featured wines, a 12% increase in overall sales and a 4% increase in total restaurant sales”. While table tents may not be part of every restaurant’s format, with desktop publishing there is no reason such recommendation cannot be made on the wine list, or even better, the dinner menu.

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