A restaurant chain in London that lists the likes of Pétrus and Beaucastel has caused a bit of a stir by announcing that it has lowered the prices on hundreds (yes, hundreds) of its top-tier wines in all its 20 venues. It's only the latest attempt to put the best light on the difficult situation for those who deal in high-priced wine.
Most of us now think twice before peeling off extra bills to buy an expensive wine. That holds true whether we are talking about a visit to a winery (just ask any boutique winery in Napa Valley), choosing something at a retail shop or perusing a wine list at an upscale restaurant.
This is the new normal, since the world's economy went south. Restaurants that had already filled their cellars with high-priced Bordeaux, super Tuscans and Napa Cabernets, however, are still looking at them. Of course, those wines are not likely to go bad if they have to age for a few years. They will only become more appealing to discerning customers. But if you're a restaurateur with significant cash tied up in those wines, what better way to get out of that bind than to lower the prices and try to make friends with customers in the process?
The London-based D&D restaurants, which includes Coq D'Argent, Paternoster and Launceston Place, took an interesting tack. Looking at shelf after shelf of unsold high-end wine, the owners decided to cut the prices and make it a feature.
Why is it so hard to find the right price for wine in restaurants? Most mark up what they paid for the bottles by a standard multiplier. Three is considered normal, which results in a wine-list price double the suggested retail. In San Francisco, where I live, it's more like 2.5. Las Vegas is closer to 4 or 5.
In a blog last week, my colleague Tim Fish reported on a highly successful restaurateur and retail shop owner in Palm Desert who offers everything on his wine list at retail plus $5. The owner, Ed Moore, got to the nub of it when he told Fish, "People are tired of buying a wine at Costco for 10 bucks and then seeing it for $45 at a restaurant."
This idea is not new, but it homes in on the biggest flaw in restaurant wine pricing—marking up expensive wines and cheap wines by the same percentage. As one frustrated wine consultant told me years ago, "You can't put percentages in the bank, only dollars." He encouraged his clients to try an experiment: Divide their total wine revenue by the number of bottles sold in that time frame, and apply that dollar figure to every bottle in the cellar.
When you think in those terms, better wines become less expensive than they were. Inevitably, customers traded up and spent more money, because better wines were more affordable. It was a win-win.
In a way, that's what D&D is doing in London, dropping the prices on the likes of Pol Roger Champagne 1988 and Didier Dagenueau Pur Sang 2008 to half what they were. Make better wine more affordable, and we all might pony up for one instead of choosing something less intriguing or settling for a glass or two, just to spend fewer dollars.
Obviously, every restaurateur would have to fine-tune that approach to match the style and character of their venues, but it's a start.
Follow Harvey Steiman on Twitter at www.twitter.com/harveywine.
Hoyt Hill Jr — Nashville, TN — February 22, 2011 2:40pm ET
David Fedonczak — Valparaiso, FL — February 22, 2011 5:40pm ET
Robert Duncan — Sunnyvale, CA — February 22, 2011 11:10pm ET
Andrew J Walter — Sacramento, CA — February 23, 2011 1:39pm ET
David Rapoport — CA — February 23, 2011 9:13pm ET
Stephen Symchych — Boston, MA — February 25, 2011 11:44pm ET
Russell Quong — Sunnyvale, CA, USA — February 27, 2011 9:01pm ET
Jeffrey Matchen — New Jersey — March 1, 2011 9:07am ET
Christian Wyser-Pratte — New York, NY — March 2, 2011 11:49pm ET
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