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Sommelier Secrets: What Restaurants DON'T Want You to Know

Statistically speaking, there’s approximately two restaurants that close for every new opening and yet, would-be restaurateurs can’t dive into the biz fast enough. You know the old adage about how a “fool and his money are soon parted”? It’s doubly true for folks foolish enough to open restaurants with little to no experience in the field. I have experience in restaurants – close to sixteen years of it – and you couldn’t pay me money to open my own establishment. It’s a tough biz, one that exacts a toll on family and personal health in a way that few other industries do.

With the recession has come a new era for restaurants. Since “dining out” frequently tops the list of discretionary (and therefore reducible) family expenses, restaurants need to hustle more than ever to earn your dining dollar. There are a few things to keep in mind when you do go out to eat:

Food isn’t the biggest expense (or the biggest earner)

Traditionally, costs like insurance, rent, labor and linen far outweigh the actual costs of food and beverage when running a restaurant. What’s a crafty restaurateur to do in order to maximize revenue? The answer is always vodka, followed perhaps by wine. Mark-ups on alcohol are one of the surest ways to generate revenue; how many dine-in restaurants can you name that don’t offer alcohol? Even fast-food franchises are trying to up their sales by adding in some booze; several Burger Kings, Sonic and Pizza Hut locations will begin selling alcohol in 2012 in test markets and even Starbucks has announced plans to offer wine at select Seattle area locations. (The Starbucks model sounds safer than the Whoppers, Budweiser and cars idea.)

Mark-ups on bottles go way beyond retail

Before American wine consumers got savvy to it, restaurants typically marked up their wine prices by at least three times the wholesale cost. If a bottle cost $10 wholesale, they’d price it at $30 on a wine list. For popular products, restaurants often gleefully mark up four or five times if they think they can get away with it. This wine math also implied that the fourth glass paid for the bottle, i.e., your by-the-glass price to your consumer was equivalent to the by-the-bottle wholesale cost you paid to the distributor. If you paid $10 wholesale for that Pinot Grigio bottle, then a single glass of it would cost your consumer $10 in the restaurant. If four 5 oz glasses of wine at $10 each are poured from a 22 oz wine bottle, you’re making your numbers in this model. Beer and then spirits are several orders of magnitude more profitable than that, you can be sure; your “well” or least expensive generic vodka brand poured in mixed drinks is a top revenue source, and is thus hotly-contested by the big liquor companies. Did someone say Grey Goose? Talk about marketing and mark-up genius.

BYOB, but don’t fret the corkage fee

Nowadays, folks can buy wine much more readily from retail and online outlets and are less willing to splurge on pricey bottles in a restaurant. Hence the resurgence of the BYOB model, something I personally only encourage if you’re celebrating a special occasion or dining in a restaurant where there’s nothing but crap on the wine list. If you do bring in an outside bottle, for goodness’ sake, be cheerful about the corkage fee. Wine at home is yours. Wine at a restaurant is serviced by people who are working, who bring your glassware, who serve it on tablecloths that cost money in a building that costs money. I once had a notorious regular at Spago Beverly Hills walk in during the middle of dinner service on a Saturday night to hand me a milk crate full of Dom Pérignon, still warm from Costco with the stickers on it. Sure, it was cheaper to buy it there but to ask us to swap our cold bubbly for his warm DP and then gripe about the corkage fee per bottle is cheap in and of itself. Hated that guy.

Stray off the beaten path to find the values

Increasingly, restaurants are offering discounts on wine that run the gamut from 50 percent off Mondays, a notoriously slow dinner period, to close-outs on expensive bottles that aren’t getting any younger while languishing in a wine cellar. I have also seen a movement towards selling wines at retail prices, i.e., marked up only 30 percent as opposed to three times. A great way to ensure good value in a restaurant setting is to select things that aren’t big-branded behemoths. Do you really think Santa Margherita or Cloudy Bay or, worse yet, Barefoot, taste any better at restaurant pricing than they do at grocery store pricing? Step off the beaten trail and you’ll land better price-points. I like Argentine Malbecs, anything Loire white and unique Italian reds (Lagrein, Aglianico, Refosco, Nero d’Avola) for good value in restaurants myself.