This article briefly addresses the issues of matching your wine selection with your general concept and your cuisine; moving to pricing strategy, picking the right suppliers, storing wines for optimum conditions. Finally, we discuss menu design, service staff training & motivation as well as monitoring results.
1. Translate your concept into your wine list
It’s a basic idea, but surprisingly often overlooked. If your concept was smartly created around the Five Aspects of the Meal Model[1], and if you have a pretty good idea of your target segment(s), this should be a simple task. For instance, if you manage a Modern French Bistro appealing to the LOHAS[2] segment, at least fifty percent of your wines should be French, organic/ biodynamic/ natural wines. The general design of your menu - including the cover material, graphic, font, colors, information language used - should scream: “Modern French Bistro” to your customer.
2. Write your specifications based on food pairing
Because most wines are meant to be enjoyed before food, with food or after food, I would suggest to write your wine specification based around the food experience. For each dish, starting with your main courses, list 1, 2 or 3 wines that would be ideal match-ups. You can think of one very “classic” match for comfort seekers (in which case you should stick to commercially significant grape varieties: Chardonnay, Sauvignon Blanc & Riesling for whites and Cabernet, Syrah/Shiraz, Merlot & Pinot for red) and something more “unconventional” for your adventure seekers (Grüner Veltliner, Viognier, Carignan or Xinomavro?). You don’t need to be super precise at this time. For example, if you look for a match for a grilled wagyu steak with pepper sauce, our spec' may just look like: “Premium, rich & powerful red”. These specifications will be helpful to communicate with your suppliers, your service staff and your customers.
3. Develop your Pricing Strategy
As a rule of thumb, the average selling price of a bottle of wine is a factor of your average price for a main course: Typically x 2. This means that if your average price for a main course is 1,200 THB, then your average bottle of wine should be sold at around 2,400 THB. This is the price point around which you want to develop your list. The next step will be to determine the price range: setting limits for the lowest price and the highest price of your wine list: the key here is to propose a range that is wide enough for your customers to choose from and narrow enough for you to anticipate and secure desired revenue. Typically, the highest price on the list should be around three times the lowest price. To determine these price points, you may proceed as follow:
A is the average price per bottle, H the highest price and L is the lowest price:
As a result, your price range should be between 1,200 THB for the least expensive bottle and 3,600 for the most expensive bottle.
If you were to divide this price range (between 1200 and 3600) in three equal tiers you would obtain the following (3,600-1,200)/3 = 800
High-tier: 2,800 THB – 3,600 THB
Average Price Mid-tier: 2,000 THB – 2,799 THB
Low-tier: 1,200 THB – 1,999 THB
This is important because to be coherent, half of your wines should be priced in the mid-tier (between 2,000 & 2,799 THB) the rest should be equally distributed in the low tier and high tier. For example, if you want to start with a small list of 60 wines:
- 30 of them should be priced between 2,000 & 2,799
- 15 of them should be priced between 1,200 & 1,999
- 15 of them should be priced between 2,800 & 3,600
Now, almost every upscale restaurant proposes premium wines with prices that are way out of this range. There are at least 5 reasons for it:
- The owner is a wine lover. He buys what he likes, regardless of the price.
- The expensive wines are here to play an “anchor” role (and make the other wines look more affordable)
- The expensive wines contribute to the premiumization strategy of the restaurant’s brand
- The restaurant targets a segment of customers who like to spend money on guests, business partners to show appreciation, impress or celebrate with super premium wines.
However relevant these reasons may be, these expensive wines are off the chart and belong to a category of their own. So, I would create a “reserve list” for these prestigious wines.
As for the by-the-glass list, which is a great way to enhance customer satisfaction, it should be priced so it does not cannibalize other more profitable drinks. There is also potential for over-pouring, waste and it needs to be managed carefully. The use of vacuum and blanket systems are great options here. When these are available, by-the-glass program is a fantastic way to let customer taste premium wines by the glass, in a way that is profitable for the restaurateur.
4. Set your gross margins
There are many ways of doing this. Back in the old days, restaurateurs used to simply factor the cost price of a bottle by 3, 4, 5, 6 or even 7 to obtain the selling price. For example, if you bought a bottle 900 THB, you would x 3 to obtain the selling price: 2700 THB (Margin: 1,800 THB); for a bottle cost at 2000 THB, the selling price (x 3) would be 6,000 THB (Margin: 4,000 THB). There are historical reasons for such (high) margins, and they were justified: Wines were selected by experts who had direct contacts with producers, they had very good prices and aged these wines for years in their restaurants' cellars before they released these wines at their peak to their customers. Later, restaurateurs started to apply different multipliers by tiers: Higher multipliers for low tier, and lower multipliers for high tier. More recently, the trend is to apply a fixed mark-up figure per bottle: something between 500 THB and 1,500 THB across the board. Some restaurateurs combine all of these approaches: A low multiplier (x 1.2) + a fixed mark-up figure (600 THB), which can be different for super-premium wine.
The last option seems to be the best as it enables to account for the direct fixed and variable costs involved with the storing and service of wine. Whatever you decide should factor the payback of (1) investment for your cellar, refrigerating units, by-the-glass dispensers, glassware... (2) occupation cost of your cellar - expressed in THB per sqm, (3) the salary of your sommelier/ wine waiters/ sales commissions and finally (4) your desired profit.
When this is done, you can set your purchasing price points for each wine. For instance, following up on the example above, given a combination of multiplier of x 1.2 and a fixed mark-up figure of + 600; a bottled designed to be sold at 2,400 THB should be sourced at (2,400 - 600)/1.2 = 1,500 THB.
During the confinement caused by COVID 19, consumers in Bangkok learned how to source food and wines from online stores and have sharpen their buying acumen: They know what's available on the market, who supplies what and at which price! With online shops and mobile devices, restaurateur are now at a disadvantage and overpriced wines in restaurants are just NOT going to sell anymore!
5. Choose your distributor wisely
There is an increasing number of wine distributors in Bangkok, some of which have been around for a very long time, others are new kids on the block to watch for as they are bringing new interesting wines on the market. The basic rule here is this: You do not source the same wines that are available in retail stores, you need to source from HORECA vendors. You also don’t need to work with 20 different suppliers if you only have 100 references in your list. You do not automatically go for the cheapest. You need the most reactive, accurate and reliable supplier. Some of the questions you may want to ask involve the shipping and storing, delivery of their wines… especially the premium wines: In our a tropical climate, these wine needs to be protected from heat. Your distributors are also great sources of information about new products, market trends and your competitors. Some may be able to extend credit, which can be useful when cash-flow is an issue.
6. Store your wine properly and in a cool place
It always amazes me to see how poorly wines may be stored in some restaurants. I recently went to a pricey restaurant in Bangkok that has a really nice wine list: I pretty much loved everything they had listed. I picked a Barbaresco and the server just pulled the bottle from a shelve behind me! I couldn’t believe it… there was several other premium wines standing up on shelves at room temperature.
Not only the wine was served too warm (at around 24°C), it also had lost some of the violet aromas that is distinctive about this wine and which I really love: What a disappointment!
"Wines on shelves in restaurant are an insult to the customer and the winemaker".
Keep your wines in a cooler! The exact temperature is less important than the constancy of the temperature. Besides, the only bottles that can be kept standing up are screw-capped. Otherwise keep your bottles horizontally or slightly tilted. What you see in retail shops (standing-up inexpensive bottles) is less of an issue because they have massive stock turnover. If your wines are going to stay more than 3 months in your stock, and if they are closed with a real cork, keep them on their side in a place where temperature is low, stable day and night. The arrangement of the wines in the cellar should be convenient: The fast-moving items should be close to the door. Everything else should be sorted according to the wine list, the used of bin numbers is fine. Any system that will help retrieving wines FAST is what you want. As alcoholic beverages are most prone to theft, you obviously need a lock on all cellars and refrigerators.
7. Print your wine list by yourself
You shouldn’t let someone else print your list: This is because wine suppliers may have only small allocations of some wines and they cannot always commit to giving you the same vintage for one year. Also, you want to be able to add, suppress, change things anytime you want, and real quick: Print your list in-house, on quality paper and insert it in a good quality menu holder. If you use a printing company, it’s going to be aesthetically flawless (maybe) but it the lengthy process and associated cost are likely to cause inertia. In the meantime your guests will be extremely frustrated every time you tell them you run out of their favorite wine.
Research has revealed a few theories in menu design regarding categorization, the strategic placement of most profitable items, the write-up style of wine descriptions, the right-alignment of prices, the use of different font and the inclusion or not of monetary signs. All of these are interesting, but in my experience, when used alone (without well-trained service staff), they only have a minimal effect. What counts is that consumers find what they want quickly.
8. Motivate, THEN train your team to sell and to serve
Your concept may or may not require to have a dedicated person for wine selling and service. Whatever the case might be, your customer should always be able to get a basic description of any wine you have. If your staff can’t do that because of the language barrier or lack of knowledge, at least your MENU should!
If you want your serving staff to act like salespersons, you need to treat them as such: Every salesperson I know earns some kind of commission on sales! So, you need to set up a system that will reward sales effort. Only then, can you start training. You can reward the team, or you can reward an individual, that’s up to whatever culture you want to install in your restaurant. You can give the commission weekly or monthly. You can set a base and a ceiling: for example, a sommelier will receive monthly commission (perhaps 3 percent of sales) on whatever figure exceeding 1,000,000 THB in monthly sales. For example, if wine sales reach 3,000,000 THB for the month of December, the sommelier will receive a commission of 3% calculated on 2,000,000, which represents 60,000 THB. You can also fix a ceiling of 50,000 THB if the base salary is already above average). Keep in mind that the amount is less important than the symbol associated with the commission, and that it helps you variablize your labor expenses.
Usually, when staff know that they will be rewarded for their sales efforts, they are more receptive to training and are more likely to apply selling and serving techniques that work for them. There are several international wine certifications available in Bangkok. Sponsoring your best service people to complete these programs should boost your sales while increasing loyalty. Some employers may think: "what if I sponsor their training and they leave?" to which I would reply: "what if you don't provide training and they stay?"... Besides, as an employer in Thailand you can benefit from a tax deduction equal to 200% of your training expense. You may also consider adding a legal contract clause for your employee to repay some or all of the costs associated with the training courses if they leave your company during of after training.
If you are in Bangkok, you can always place a job advert on this forum to source from a pool of already qualified applicants.
9. Monitor, evaluate & adapt
Whatever you want your wine program to accomplish, you need to communicate it in quali-quantitative terms and measure & evaluate on a consistent basis. Employees usually respond to what you set, monitor and reward. Low sales and bad service happen all by themselves; salesmanship is the same as excellent service. Basic supervisory skills requires a clear mission statement and goal setting, some degree of monitoring, measurement, gap analysis, and sensitive coaching: As my old GM used to say: be “Tough on the standards, and soft on the people!”.
The guidelines outlined above are helpful mostly in start-up situations. Forget the idea of creating the perfect wine list on day 1. Start with a limited list and then expand if it makes sense. Chances are that 6 months down the road, your wine list will look very different from the original one, and this is a good thing: It shows that you can adapt to your customers and your environment and that you stay up-to-date.
Conclusion
A successful wine program reflects the general concept of the eating place where each wine has a specific purpose: to match a specific moment or a specific dish enjoyed by a specific customer. The wines are sourced by HORECA suppliers and stored securely in air-conditioned depot. Prices are in ad-equation with the food prices, to make a coherent, well-structured selection for the customer while permitting the restaurateur to reach his/her financial goals. Printed in-house, the wine list allows immediate response to changes and it is easily readable. Finally, an excellent wine program does not happen by itself: It is carefully managed by highly competent managers and executed by motivated and trained service staff.
Want to conduct an audit of your wine program? Give me a call or drop me a Line at 0870380205 Christophe Mercier, DipWSET
[1] The Five Aspect of the Meal Model (FAMM) is a concept development tool developed at Örebro University by IB Gustafsson and her team, covering the Product, the Meeting, the Room, the Atmosphere & the Management.
[2] LOHAS: Lifestyles Of Health & Sustainability: Arguably the fastest growing market segment today.