Punch Down

Thanks for visiting my blog. Here is where my life in wine will be documented. I am a level two certified sommelier through the International Sommelier Guild. I have worked in virtually all aspects of the wine industry and, believe it or not, I am still enthusiastic as ever. So, please join me as I muse about regions, give reviews, and sometimes rant about this little thing we call wine.

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Location: Boise, Idaho, United States

Sunday, February 15, 2009

Volume One - The Restaurant

In these troubled economic times, people are dinning at classy establishments less and less; choosing either a homecooked meal or (gasp!) fast food to cure their hunger. I've seen over a dozen fine restaurants close here in the Boise area within the last year and I feel for this side of the industry. However, while I wish people who can still afford it would frequent their favorite dinning establishment more often, restaurants are doing nothing to make themselves more enticing to those of us who enjoy wine with our meals.

Most restaurants I see gouge the customer by charging 2 1/2 to 3 times wholesale pricing on wines. This mistake is a result of the flawed thinking that wines are an inelastic good and that people will buy Clos St Jean at any price because they want Clos St Jean. What they don't realize is that there are tons of wines that are cheaper (and better) than any Clos St Jean wine (or any of the big names, for that matter), but the people who write the wine lists won't consider them because they have never heard the names before. In these times, people will buy what is good and affordable.

Think about this: a wine costs you $20 wholesale. You put it on the shelf for $60. People know that they can go down to their local wine merchant and pick it up for $28.95. Do the right thing! Wine savvy people know they are getting ripped off here and they will be reluctant to come back. You don't have to sell the wine for retail price, but show that you care about the customer and charge 75-100% of wholesale. First, you attract more of the wine crowd by offering your beverages at a more reasonable price than the competition and, this is key, YOU'LL SELL MORE WINE! Let's think about that $20 bottle, shall we? If you sell one bottle per week at $60, you made $40. Good for you. Now, let's say you drop your selling price down to $40 and you sell three bottles. Now, you've made $60. By doing this, you do two things right:

1) You make more money.

2) You make your customers happy.

It really is simple economics here, and I don't see what is so hard about this. Once you master this concept, you will have created your very own stimulus package - and at no cost to you or your country.



Blogger Benjamin said...

So, basically, the Bistro business model.

7:49 PM  

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