Thursday, December 24, 2009

The price is right

Restaurant wine pricing often puzzles the average consumer, no more so than today; everyone knows wine sales are soft, especially at the higher end, but prices seem to be staying stubbornly unchanged. 

The issue is always a fraught one; restaurants have long discounted wines for special events and holidays, yet never without fear of lost profits. But given today’s economic concerns, operators who cling to mark-ups of 300% in the face of plummeting sales shouldn’t wonder why their check averages are dropping. That’s especially true as distributors consider price cuts to get stock moving and make room for new vintages. Similar moves by operators offer opportunities to build traffic, profits or both.

Some operators have been particularly aggressive about selling wine in the current economy. At the two-unit Rizzuto’s Wood Fired Kitchen and Bar operation in Bethel and West Hartford, Conn., Monday night for the past year has meant half price on all bottles on their 15 wine list. (Rizzuto’s management expects to introduce the program at a new unit set to open shortly in Westport, even as they expand to 30 bottles.)

The list is impressively price conscious even before the discount, until recently topping out at about $45, with the lowest price $24 for a white zinfandel (The recent expansion brought in wines priced up to $70). With the half-off discount, that means Monday’s customers routinely walk away feeling they’ve enjoyed quite a bargain.

“Wine sales are pretty good that night, but we don’t think about it in terms of sales figures or profits, because we’re selling them for barely above cost,” says Paul Mannion, general manager of the Bethel unit. “It’s more about getting people in and giving our regular customers an opportunity to buy something a little special for them at a bargain price.”

Mannion hits on something key; in troubled times, patrons are less likely to splurge or make adventurous dining and drinking decisions. Rather, given the opportunity, they’ll opt to return to a familiar restaurant, especially one that treats them well and offers bargains. Rebuilding wine sales through well promoted periodic or across the board price cuts can build the same comfort level.

Mannion says traffic has ticked up on Mondays, and notes hand selling a wine-timid guest is easier for staff when they see familiar faces. The days of rewarding customers with free drinks or happy hours may be gone, but cutting wine prices in half goes along way toward building traffic on slow nights and rewarding regular customers.

Even in Manhattan, turning customers into friends through considerate wine prices works. At Braeburn, a contemporary American bistro in Greenwich Village that opened just as Wall Street was imploding last year, pricing consciousness played an important role when the doors first opened, according to partner and general manager John Paul O’Neil.

“We wanted to go about this with an understanding that people were suffering,” says O’Neil. “We noticed people were going for things within their comfort level, what they know and trust.”

Before opening, O’Neil and then wine director Katherine Beto searched for high quality wines they could sell for less than competitors. They employed standard practices like buying in quantity, but keeping their mark-up low also on their minds as they tasted through hundreds of wines. Peppering the 120-bottle list with well-priced offerings from Hungary, Lebanon, Cyprus and Greece as well the Rhone, Tuscany and California, they kept about ninety percent under $100, with fifteen or so wines also sold by the glass or in small carafes. As customers gravitated toward comfort foods and safe wine decisions, the Braeburn pricing strategy worked, O’Neil says.

Staff played down trading guests up the list, allowing bargain hunters to enjoy the results of O’Neil and Beto’s search. Guests have been opting for wines around $40-50, though lately O’Neil’s noted customers moving up the list a bit. More importantly, the efforts to create customer loyalty through sensible wine pricing from the day the restaurant opened has made its mark, as traffic and sales are steadily building. Score another fan of wines priced to sell.

(A version of this story first appeared in the Dec. 9 on -line edition of Nation's Restaurant News.)

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