Wed 5 Nov 2008
According to a bulletin I received from My Foodservice News (mymfn.com), matters look pretty dire for the restaurant business in America. Under the headline, “Restaurant Performance Index Fell to Record Low,” the National Restaurant Association announced that in every category, including current situation, expectation and capital expenditure, the month of September was one of the worst in the history of record-keeping for the industry. Statistics have not been issued yet for October, another month of implosion for the world’s financial institutions, as well as my 401k, but the current report indicated that restaurateurs are extremely pessimistic about the prospects for the next six months.
But in the same newsletter, a piece by Mike Steinberger, who writes about wine for Slate.com, trumpets “Good News about the Recession!” Whoa, what good news is this? That restaurants may begin cutting prices for the wines on their lists. “Extortionate markups do send a regrettable message,” says Steinberger, “but it is nothing that a deep recession can’t cure. In the current economic climate, gouging on wine is not just unsporting but suicidal. Restaurants looking for strategies to survive the downturn ought to begin by cutting the prices on their wines.”
Gosh, Mr. and Mrs. America, don’t you feel better already about your pensions going down the tubes? What else will a deep recession cure? Obesity? Drug addiction? This is like the crew of the Titanic telling passengers, “Yes, the ship is going down, but, look, we’re waiving the shuffleboard fees!” The remedy for outrageous wine prices in restaurants is to stop eating out.
For restaurant wine prices to go down, prices on wines all the way from the producer to the broker and supplier to the wholesaler to the retail outlet, whether a store or a restaurant, will have to come down, and I see no sign of that happening. Coincidentally, the same day that I received this report from My Foodservice News, there dropped into my inbox an email newsletter from the venerable and honorable Burgundy Wine Company in New York, touting the 2006 releases from Domaine Leflaive. Admittedly, Leflaive is a high-class operation and the wines are superb, but $58 for a Bourgogne Blanc? $106 for a village Puligny-Montrachet? $148 to $290 for Puligny-Montrachet Premier Cru wines? Here’s a product that seems recession-proof if you possess sufficient fiduciary prowess to indulge.
November 5th, 2008 at 10:59 am
Fredric,
Shouldn’t we accept any wine price reduction in restaurants that we can get?
I agree that we likely won’t see prices reduced in restaurants unless producer prices decrease, but I don’t think that’s why prices in restaurants are exorbitant. Restaurants attempt to make most of their money on wine rather than on food, and I’ve always felt that not only is that a disservice to consumers but it is limiting to volume wine sales in restaurants.
November 5th, 2008 at 11:20 am
of course, Thomas, restaurants have been in the business of charging too much for wine forever, amd indeed they make far more money from wine than they do from food, which operates pretty close to the margin. But I don’t think restaurants are going to reduce wine prices if they can get away with not doing it, unless the rare restaurateur or manager understands that fair wine prices will lead to contended customers.
November 5th, 2008 at 5:18 pm
Contented customers be damned! I tried to prove to restaurateurs that the name of the game is volume sales–instead of holding high-proceed inventory, wouldn’t it be better to move three times as much wine? That can be done only after the wine price is right.
I can count on one hand the restaurateurs who understood me–and still have a few fingers left over! But those few said that their profits did move in the right direction, and so did their nightly turnovers, as well as staff tips who moved more wine.
November 5th, 2008 at 5:19 pm
oops: should have read, high-priced inventory
November 6th, 2008 at 8:29 am
FK, you meant “contented” customers?
November 6th, 2008 at 8:59 am
A few of Atlanta’s top tier restaurants have cut wine prices 50% through the end of the year. Bottles and by the glass.
That’s a huge move (and a bit scary).
November 6th, 2008 at 11:15 am
maybe they’re contentious too.
Dirty Wine South … that’s amazing. perhaps i’m too pessimistic.
November 6th, 2008 at 1:54 pm
Let’s see: by tripling the retail cost a wine that retails at $30 costs $90 in the restaurant–a 50% reduction makes it cost $45 in the restaurant.
An improvement–I suppose, but I’d bet retailers would love to have such a markup.
November 7th, 2008 at 2:11 pm
At a trade tasting recently in NYC, a wholesaler (with a rather high-end heavy portfolio) said his volume of orders had not gone done, but that restaurants were buying almost exclusively at the low end, as in wines that can be listed at $40 or so.
It will be interesting to see in Manhattan how quickly prices of already cellared “good stuff” may fall. But as you point out, even if they fall, there are a heckuva lot of people who just are not going to eat out on the town as often.