Wine’s Crisis On-Premise and How to Resolve It – Part 2

September 12, 2016 § Leave a comment

On-premise wine selections are moving toward uniformity and mediocrity at the same time cocktail and beer lists skew toward variety and innovation.  Here are 5 steps that restaurants can employ  to rectifying this situation and possibly  reversing wine’s continuing decline. Part 3 of this series will deal with wine suppliers and distributors role and how they must step up to resolve this.

  1. Offer a selection of High-Recognition, Emerging and Discovery brands
    In casual chains, Winemetrics encounters a plethora of wines frequently found on the endcaps of retail chains. This would lead me to believe that chain wine buyers are basing their wine selections on the leading brands in retail stores. Can that be possible? While a certain portion of the population may be brand loyal in all occasions, aren’t restaurateurs aware that consumers dine out for variety? Even smaller wine lists can have one or two selections that are not well known but represent superb values. Of course, selling such wines requires some server education, see #5.
  2. Offer value on your wine list
    That doesn’t mean discounts across the board; many chains charge a little more for their by-the-glass selections but offer a steep discount on bottles. Others offer benchmark wines at modest markups. What you don’t want to do is price the wines with a huge retail presence at an excessive mark-up.  Nothing says ‘rip-off’ more than charging +3x standard retail for a bottle everyone know the retail price of. Special Note: If you are a fine dining establishment, don’t offer me the same wine as those I might find in a casual chain (with the accompanying excessive markup). Recently I have found identical wines by-the-glass (BTG) on the lists of fine dining steakhouse chains as those on casual dining chains.  When I see this, I immediately assume that the fine dining establishment doesn’t care about its BTG business and wants to push its customers to purchase an over-priced bottle or is simply to lazy to care about its BTG selection. Again, as a wine consumer I find this insulting and never return to such establishments.
  3.  Publish your wine list online and keep it current
    Nothing upsets me more than a restaurant whose website lauds its awarding winning wine list and brilliant sommelier only to neglect to provide a wine list (with prices) on its website. And nothing is more insulting to a consumer who plans to purchase significant wines with his or her meal only to open a wine list and find them all egregiously overpriced.  I never return to such establishments and I’m certain many other wine aficionados are of the same mind. If you’re going to rip me off, at least have the decency of letting me know in advance so I can make a reservation elsewhere. On the other hand, if you have a great wine program with reasonable prices (are you listening Legal Sea Foods?) then mention it on your website. Looking at many chains’ websites, you wouldn’t even know they even offered wine – unbelievable!
  4. Ask my opinion about my dining (and drinking) experience at your restaurant but provide an incentive
    Nearly every restaurant provides a survey form with the check these days. Most ask about the food quality and service but few ever request input on the beverage program (the most profitable segment of their business!). I generally ignore these as no compensation offered in return for my input. However most consumers would be willing to provide extensive information on their dining experience, preferences and even demographic information if offered an incentive such as a free appetizer or half-price glass of wine on their next visit. Unfortunately, I have yet to see such an offer on any survey in the hundreds of chains I have visited.
  5. Innovation + Education – One won’t work without the other
    A few years ago I was dining out in an upscale casual chain that had a small but excellent list with a number of great values. They also offered flights of any 3 BTG wines for a reasonable price. The only problem was that the server did not know the restaurant offered flights, even though it was prominently printed on the menu (This was one of the savvy chains that actually had the food selections and wine list on the same menu!) Apparently, the server had never been trained on this feature despite his many months of employment and did not know there were special tasting glasses for the flight, so my 2 oz. pours were delivered in the bottoms of 3 balloon glasses.  Sadly, this restaurant chain no longer offers flights nor its interesting and well-priced wine selection. The best wine program in the world won’t work unless some investment in education is made. Predictably, I have not been back to this establishment.

    In Wine Crisis On-Premise and How to Resolve It – Part 3, the final installment on this subject, we examine how wine suppliers, in their pursuit of profits and on-premise hegemony, have been complicit in the decline of their product in the restaurant dining arena.

Wine’s Crisis On-Premise and How to Resolve It – Part 1

August 15, 2016 § 3 Comments

Winemetrics is halfway through its 2016 on-premise wine list surveys, and to be frank, there is very little good news to report. Wine lists are not only decreasing in size but also in variety. Selections are increasingly based on brands controlled by the top 10 suppliers. Since the start of 2015 we have seen many iconic independent wineries ‘absorbed’ by the largest suppliers. Benziger, B.R. Cohn, J. Winery, Orin Swift, Patz & Hall, Siduri, Talbott, The Prisoner to name just the ones that come to mind.  But this decline of wine on-premise is just half of the bad news for wine. The meteoric, unstoppable rise of craft beer and craft cocktails may spell the end of wine on-premise as we know it. The key, and most damning piece of evidence is the admission (in confidence) from wine professionals themselves. When not at company functions or on the corporate  expense account, they are drinking beer and cocktails, simply because there is more variety, flavor and value in the average beer and cocktail list. This is especially true in casual restaurants where the same wine products appear with monotonous regularity. For the record, I am not a proponent of the ‘small is beautiful’ school of wine marketing. Major national brands are extremely important to a segment of wine consumers that seek the comfort of a consistent, well-known producer. However, when these brands or their line extensions dominate wine lists to the exclusion of any innovative or more esoteric products, it is at that point that any wine consumer with a slightly more adventurous palate closes the wine list and orders a beer.  And, I confess, that’s what I do now.

If you believe my observations aren’t supported by facts please click on the link below to Lewis Perdue’s Wine Industry Insights where he features a recent Gallup survey.

From Winemetrics’ observations of hundreds of chains and independent restaurants, it does not appear that the wine industry is taking this threat seriously. As a 35 year veteran of this industry, I have seen trends, brands and fads come and go. I remember vividly a distributor presentation by a wine cooler executive in the 1980’s who extrapolated his brand’s 2 year growth curve a decade into the future, promising his audience of a massive windfall in profits. According to the executive, this was ‘guaranteed’.  It didn’t quite work out that way – has anyone seen a wine cooler recently?

Of course, we cannot lay the blame solely on the wine industry, as the restaurant industry is also complicit in this process. Possibly persuaded by off-premise sales figures and incentives of the larger suppliers, restaurateurs have yielded too much control of their wine lists to big corporate interests. In Part 2, I’ll discuss steps restaurants can take to not only invigorate interest in the wine segment, but actually take ownership of innovation for their wine selections.

 

 

 

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)

10 Ways Restaurants Undermine Their Beverage Programs

June 3, 2014 § Leave a comment

The best planned and well-conceived beverage program can be derailed or at least minimized by common mistakes. Here are 10 of them and they are far more common than you would expect.

  1. Failing to post wine and drink menus on the restaurant website OR.
    • Leaving outdated information on the site
    • Posting ‘sample’ lists that don’t reflect the diversity and scope of the beverage program
    • Incomplete list e.g have wine BTG but no BTB list or fail to include craft beer and/or a complete cocktail list
  1. Failing to provide pricing on drink list (common problem for beer and cocktails). Would you order from a dinner menu that had no prices? So why the double standard for drinks?
  2. Failing to include drinks (wine BTG, beer, cocktails) on the food menu.
  3. Using the words “Ask your server about our (reserve wine list, craft beers, small-batch bourbon, etc) .” If it’s worth selling, it is worth placing on a menu that may have to be reprinted once and a while.  Server’s have a hard enough time memorizing the daily food specials – don’t expect them to recite and describe the 20 craft beers you pour.
  4. If there is a drinks menu: failing to place the wine list, drink list, beer list on the same menu. While a ‘complete’ beverage menu  is common in casual chains, many upscale-casual and fine-dining establishments force their patrons to juggle menus.
  5. Not having a craft beer list (or a cocktail list)
  6. Not training your bartenders to have a background on what they are serving.
  7. Treating beer taps as faucets (bartenders who let a beer tap ‘run’ prior to pouring a draft is one of greatest sources of lost beverage revenue)
  8. Excessive pricing of mass-market brands.  Consumer seeing over a 3 times retail price for a wine they frequently see on an end-aisle display at their local liquor store will assume the restaurant is overcharging for everything and will probably not return (FYI, I don’t)
  9. Not having tastings or flights of wine and beer (some enterprising chains offer cocktail flights by the way).

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).

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

February 27, 2013 § 1 Comment

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

© Winemetrics LLC, All Rights Reserved

“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.

Red Lobster Unveils Most Comprehensive Menu Transformation in Brand History (but not the Wine List)

October 24, 2012 § 1 Comment

This was headline of a recent restaurant newsletter I received (the parentheses are mine). The article mentioned the extensive menu changes, brand repositioning, the addition of a wood-fired grill and new Bar Harbor motif for Red Lobster’s renaissance. What was not mentioned were the changes in the wine list, so I examined the Red Lobster website to note the expected improvements.

Apparently the same level of investment devoted to Red Lobster’s renovations and repositioning was not allocated to the wine program.  Red Lobster’s newest wine list revision, already among the smallest in the Casual Seafood segment, according to Winemetrics 2011-12 Chain Restaurant Report, lost a listing and is now tied for last place with Flanigans, a Florida fish house, with 14 by-the-bottle (BTB) listings.  It should be noted that the beer selection is now larger than the wine list at Red Lobster.

There is an upside as two new varieties were added, Pinot Noir and Moscato and no existing varieties were eliminated,  increasing the list’s varietal diversity.  To make way for these additions however, Cavit Pinot Grigio, Columbia Crest Merlot and Excelsior Cabernet Sauvignon were cut from the roster.  The big winner in this change is Trinchero’s Sutter Home, which now has a Moscato listing to add to its Chardonnay, White Zinfandel and Merlot entries,  giving it a 29% and 27% share of the BTB and BTG listings, respectively.  Certainly you have to applaud Sutter Home’s salesmanship, but shouldn’t the leading Casual Seafood chain also be the leader in beverage programming?  This was a role that Olive Garden, it’s sister restaurant at Darden, played for a number of years until its competition caught up.  Based on research published by Cornell’s Hospitality Research Center, we know that larger wine lists generate more revenue (up to 150 listings!).  Wine promotions, such as tasting portions, wine recommendations and wine flights, when properly executed, all generate substantial increases in profit.  Yet such promotions are used by just a handful of casual chains.  It is disheartening to see one of the nation’s largest restaurant operators, once a champion of wine promotion,  moving in the wrong direction.  More on this in our next blog entry.

Are Fine-Dining Restaurants Alienating Wine Consumers?

July 20, 2011 § 1 Comment

Two quotes caught my eye in the recent Restaurant Awards issue of the Wine Spectator in Harvey Steiman’s article “A Growing Passion for Wine”.  The first was Piero Selvaggio’s quote “Today, any restaurant with a serious wine program must have at least 25 or 30 (wines by the glass).  People can try something they might otherwise take a chance on.”  The second, in the same article, was from a wine industry icon whose credibility cannot be questioned “I walk into some restaurants today and I am embarrassed.  I’ve heard of maybe 25 percent of the wines on the list”, says Kevin Zraly, who put together the list at New York’s Windows on the World that won a Grand Award in 1981. “Too many young sommeliers get obsessed with having a list full of wines that no one else has. My list is better than your list. And they are leaving the customer out in the cold.”  (My emphasis)

Well Piero, offering  just 30 wines by the glass puts you 3 behind Olive Garden and 8 under the BTG count at P.F. Chang’s the last time I checked (Note: P.F. Chang’s also offers these same wines by the half-glass).  And just so we have a fine-dining benchmark here, Gramercy Tavern offers 28 wines by the glass and taste. Winemetrics’ survey of over 165 chain restaurants indicates that the average casual dining chain has 23 wines by-the-glass (BTG), the average upscale casual list has 30 and the average fine-dining chain 32 (actually, if you take out Flemings with its 100+ BTG selection, that average falls to 29).  My point is that fine-dining restaurateurs, and their sommeliers, should get out a little more and check out a local upscale casual chain – they may find the wine choices, promotion and service surprising.  For example, what if I were dining in your restaurant and asked to taste one of your BTG selections before buying it, what would the waiter’s reaction be?  Well, at Olive Garden, the waiter would not only swiftly comply with that request but might even offer me a taste before I even asked for one!  

I want to thank Kevin Zraly for publicly addressing an issue that rarely comes up for discussion in blogs, the arrogance of the wine elite. It is very easy to ignore the vast majority of wine drinkers when you are being endlessly courted by the best producers and suppliers on the planet.  Suggested reading for the Masters of the Wine Universe: Constellation Brands Project Genome which documents the importance of recognized brands to all levels of wine consumers.  The arrogant assumption here is that fine-dining customers are all avid readers of Parker, WS or other wine publications and are ‘ in the know’.  In my experience, just the opposite is true. During my days in marketing with a major importer, I would get frantic calls from colleagues and friends, all considered wine knowledgeable, dining out in certain top NYC restaurants. There was nothing on the restaurant’s wine list they recognized and they were calling me to vouch for some obscure producer from California, France or Italy.  Certainly there is room for both obscure finds for the wine enthusiast and well-known, respected brands for the less adventurous consumer.

 I realize many beverage directors/sommeliers pride themselves on educating the consumer but to someone who thinks he or she knows a thing or two about wine, handing the wine list back to the sommelier as if to say, “ I don’t know any of these wines, you pick one for me”, is downright demeaning.  If Kevin Zraly is saying he doesn’t recognize 75% of the wines on an establishment’s  list, I think there may be a comfort issue with a vast majority of their customers.

For the record, I have no affiliation with any of the restaurants, people  or the wine company mentioned in the above copy.

Is Your Wine List Better than P.F. Chang’s?

July 6, 2011 § Leave a comment

In compiling our wine list analysis of over 165 chain restaurants, we made some startling discoveries.  It appears that some casual restaurants are being far more innovative than their fine-dining counterparts.  Winemetrics evaluated each chain for features that increased customer wine choices and also for features proven to increase wine revenues.  For the purposes of this article, we condensed our findings to a 6-point total from the 100 point total used in our Wine List Report Card and trimmed the size to 10 representative casual, upscale casual and fine-dining restaurants. Below is a summary of our findings (more details can be found here):

Chain Name Type Complete WL Online # Wines BTG Total Score
PF Chang’s Casual 1 38 4
Legal Seafood Fine 0 29 4
CA Pizza Kitchen* Casual 0.5 27 2.5
Ted’s Montana Grill Casual 1 22 2
Roy’s Fine 0 41 1
Oceanaire Fine 1 33 1
Morton’s* Fine 0.5 30 0.5
Chart House Fine 0 32 0
The Palm Fine 0 28 0
J. Alexander’s Upscale Casual 0 26 0
         
1 = Yes,  0=No        
* Has a core wine list online with no prices    

While no list scored a perfect 6, a casual-dining chain took first place, P.F, Chang’s China Bistro.  This chain has a have-it-your-way approach to its wine selection and posts a complete wine list with prices on its website.  The real winner however, should have been Legal Seafoods, which has one of the most feature-rich wine lists in our entire survey. Legal Seafoods major weakness, however, is that unless you visited one of their restaurants, you would never know about its superb wine selection. There is no wine list on their website (not even a sample or core list) or even a mention of their top-notch wine program. This is a huge deficiency on Legal Seafoods part and a disservice to both existing and potential customers.

P.F. Chang’s, although tied with Legal Seafoods in points, took the #1 spot due to a significantly larger by-the-glass selection, of which all are served by the half-glass (3.5 oz.).  This chain goes one step further, offering a build-your-own flight option of three 2.5 oz. pours of any BTG wine for $8 (price varies by location). Overall, a solid wine program with features that are curiously absent from many fine-dining wine lists.

Top Ten Wine List Mistakes

May 24, 2011 § Leave a comment

As this recession continues, the on-premise channel continues to struggle. A number of restaurant chains were forced to file for Chapter 11 (see our subsequent post) and overall revenues and profits have declined, especially in the fine-dining segment. In the face of these economic challenges, you would expect on-premise operators to be using every resource possible to maximize profits.  While  restaurants are launching food trucks, offering GroupOn discounts and investing heavily in social media, there is one important revenue stream they appear to be neglecting: their wine lists. 

In compiling wine list data from over 160 national and regional restaurant chains for our upcoming Wine List Report Card Study, we discovered that the overwhelming majority of restaurants are not employing the features and tactics proven to increase wine sales.  Using research provided by Constellation’s Wine Genome Project and that conducted by Cornell’s Center for Hospitality Research and combined research by Cornell University and Southern Wine & Spirits we reviewed sample lists of these chains and compiled a list of the ten most common mistakes (and by mistakes we mean omissions or features that hurt wine list profitability). 

1. Not placing a current, complete wine list on the restaurant website. This means a current list complete with prices. About 2/3 of restaurants in our chain survey had some form of wine list information on their sites but just over 50% listed prices.  According to Constellation’s Project Genome, Image Seekers,  who represent 20% of wine consumers and 24% of sales, typically examine wine  lists  online prior to visiting a restaurant. With consumers now able to easily access restaurant websites on mobile devices, it no longer makes sense to withhold information from potential customers

2. Not placing wine selections on the food menu. Placing wines on the food menu is one of four tactics tested that boost wine revenue , but  less than 40% of restaurants chains in our survey employ this tactic.

3. Not offering wines by the half-glass or taste (2 oz.). Less than 20% of restaurants in our survey utilize this proven profit builder, yet according to Cornell’s Hospitality Research offering 2 oz. tastes of 5 wines increased their sales 47%.

4. Not offering well-known, respected brands in key categories.  Listing wine brands with a well-known reputation for quality was another of the four tactics identified by Cornell’s Hospitality Research for improving wine sales. Additionally, Constellation’s Project Genome found that Enthusiasts and Traditionalists, accounting for 40% of wine purchases, tend to seek out such brands.

5. Not offering enough selections under $50/bottle. This is normally an issue with fine-dining accounts.  According  to a recent article in Wine Business,  many  fine-dining establishments never reduced their prices during  the on-going recession. And Winemetrics’ own data shows no increase in from 2009 to 2010 in the under $50 BTB segment which comprised 29% of all wine BTB listing both years. Perhaps as on-premise operators realize that there has been a permanent change in the buying behavior of most wine consumers, we will see this value-oriented segment of wine lists increase in size.

6. Not offering (enough)  reserve wines.  Having a section dedicated to reserve wines on the list is another proven tactic to increasing wine sales, according to Cornell’s research. In Winemetrics’ survey of over 160 national and regional chains,  less than 6 percent of lists provided a section for reserve or special wines. (this does not include the presence of a separate reserve list that normally must be requested by the customer and as a result one that is rarely seen by most restaurant clientele).

7. Excessive margins on wines popular in the off-premise channel.  Carrying well-known brands presents a dilemma for restaurateurs. On one hand, a large segment of wine consumers want to see brands on wine lists that they recognize but excessive discounting of these wines by retail chains and online vendors limit what  restaurants can charge for many popular brands.  Customers are accustomed to paying 2-3 times the retail price for a wine, but may form an overall negative opinion of a restaurant if they perceive they are being overcharged for their favorite brand.  

8. Using $ signs on your wine list.  Another finding from Cornell’s research, the presence of dollar signs actually depresses wine sales. Nearly all chain restaurants are cognizant of this but we occasionally find some independents using these sales reducing notations.

9. Having a below average number of selections on the wine list .  Cornell’s research indicates larger lists produce greater revenue, and this works up to 150 items. Winemetrics’ survey of over 70 casual dining chains finds that the average number of wine listed by-the-bottle is 29 and the average by-the-glass is 23. To be competitive casual-dining restaurants should meet or exceed these averages.

10. Failing to add wine recommendations (including wine/food pairings) to wine lists.  Wine recommendations, whether they be wine and food pairings or  recommended offering on a table tent, increase overall wine sales significantly.  The caveat here is not to offer too many, no more than 5, in order not to confuse the customer. Wine sales actually declined when  five wine and food pairings were offered. In our latest survey, very few accounts offered wine recommendations of any kind on their lists.

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