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September 17, 2010 10:20 pm
When it comes to restaurant bills, wine is very often something of an “elephant in the room”. Firstly in terms of size – any bottle of wine, other than the house wine, is invariably more expensive than any dish on the menu – but also because there is usually very little discussion about whether that price is justified.
There are numerous restaurateurs who collate their wine lists with care and enthusiasm but they are significantly outnumbered by those for whom price rather than quality is the overriding factor. What’s produced in the kitchen is underpinned by the profits generated at the bar and from the wine cellar. The business model used by most restaurants strives for the same gross profit margin on food and drink alike. But the relative ease of serving the latter leads to an incontrovertible conclusion: drinkers subsidise non-drinkers. Without the former, menu prices would be even higher.
This theory was borne out during a recent conversation with Michel Roux Jr of Le Gavroche in London, a restaurant that has always invested in its wine cellar. While the number of diners in August had dipped slightly, Roux said this had been offset by his customers’ enthusiasm for his collection of mature bottles of Lafite, Mouton Rothschild and Pétrus.
However, few restaurateurs are able to invest in wines in the same way as Le Gavroche and those that do face new challenges. Firstly, there’s a growing awareness among diners about wine prices, thanks to the increasing number of wine search engines. Secondly, rising grain, meat and coffee prices are already threatening to push menu prices even higher. In Britain, these factors come against a backdrop of government spending cuts, muted consumer confidence and, from January 1 2011, a rise in VAT to 20 per cent.
Most restaurants multiply the cost price of bottles by three – albeit usually with smaller cash margins for more expensive wines. I believe the time is right for a radical overhaul. One step would be for restaurateurs to acknowledge their wine suppliers in the same way that many have embraced food suppliers, often naming them on their menus. This could add value and credibility in the customers’ eyes.
Another idea would be a lunch wine list, with six whites and six reds each available in 250ml carafes to go with increasingly popular fixed price lunch menus.
In Britain, the recently reported fall in alcohol sales of 6 per cent over the past year has led numerous restaurateurs to listen to the blandishments of those who have recently set up the BYO Wine Club. This allows members to take their own wine to participating restaurants under certain conditions, which can be cumbersome and restrictive. For restaurateurs that want to encourage such customers, it would be far simpler to charge £10 corkage on any bottle once the customer has bought at least one bottle from the wine list.
A more viable and innovative approach to wine pricing has recently been introduced by Xavier Rousset at 28º-50º in Fetter Lane in the City of London. It depends on a collaboration between restaurateur and individual wine collectors, who offer their collections for sale at significantly reduced margins.
It is a relationship that has been tried and tested at Cru and at Veritas in New York, and at Rockpool Bar & Grill in Sydney, Australia. In London, Rousset was approached by a customer and collector at his other restaurant, Texture in Portman Square, asking if he would be interested in such a collaboration as the collector had already amassed more wine than he could possibly drink. Rousset, a passionate oenophile, liked the idea and the result is 28º-50º, a name inspired by the latitudes within which most vineyards flourish. While the Collector List incorporates wines from the original customer, who has also become an investor, it has attracted wine from another six collectors.
Working on an overall gross profit of 35 per cent, half the industry norm, Rousset says business has, since he opened in June, been far better than even he had hoped. It is easy to see why: the list’s highlights include mature champagne; top quality burgundy and claret; Italian wines cheaper than on several retail lists; and some rarely seen mature Australian reds. The fresh and seasonal food is good too.
Working on such reduced margins means the staff have to take extra care. “If we break one bottle, we have to sell four to cover the loss,” says Rousset.
But already more wine collectors are keen to get involved. “There are about another 10 who have shown me their private collections,” says Rousset. “They want to make room in their cellars for the new vintages. I know that my customers would like to help them.” Could this mutually beneficial arrangement prove to be a blueprint for other establishments?
More columns at www.ft.com/lander
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