Tuesday, May 06, 2008

Is there value to be had under £50?

There is a comment that has been left on one of my earlier posts which has had me cogitating over the last few days. (http://www.blogger.com/comment.g?blogID=7206779&postID=2556388373739861579&isPopup=true). Is there any value to be had on a restaurant winelist for less than £50. The short answer is not much. Let me explain why.
Generally most restaurants will operate using a standard margin, either gross profit or cost of sales. The two figures are related - a 30% cost of sales = 70% gross profit. In other words 30% of the selling price is represented by the cost of the item, therefore 70% is profit (gross profit because things like operating costs have yet to be removed). Now a restaurant with a large and extensive winelist ought to operate a floating margin, that is the margin will vary according to the cost of the bottle. Hence the most expensive wines are usually operating on the lowest gp/highest cost of sales. So at the bottom end of the wine list will be the house wine, which is the least value of all, as it carries the highest margin, figures of 80% are not uncommon. Then the middle of the list will sit with a slightly lower margin 70% and the wines at the very top of the list will sit with 50-60% gp. After all, you probably arent going to sell loads each month, so the impact on your gross profit will be negligable. So those wines under £50 are typically going to sit with a 70% margin, compared with slightly more expensive wines which will have a lower margin.

Now the Arkle wine list operates a floating margin, with the wines at the bottom of the list carrying the highest mark-ups, and those between £40 and £90 representing the best value for money. We have some cracking wines under £50 that have a slightly lower margin, because they are something out of the ordinary, something slightly special that were I to put the prescribed margin on it, would make it too expensive to try out. So there are some bargains to be found.

Bin 313 - Itsas Mendi - Txakoli from Bizkaiko Txakolina in the Basque region of Spain. An unusual aromatic white wine made from Hondorrabi Zuri. A reasonable inexpensive spanish white at £34.

Bin 391 Planeta - Cerasuolo di Vittoria, a Frappato, Nero d'Avola blend from the only DOCG vineyard in Sicily. Rich cherry fruit flavour with a beaujolais style lushness and accessability, a positive steal at £35.

Bin 411 Bodegas Fernandez Rivera - Dehesa La Granja, from the stable of Alejandro Fernandez, a crianza tempranillo from the tiny region of Zamora. His home estate. Dense brooding fruit, richly concentrated flavours with none of the sunburnt oaky characters associated with spanish reds. £37.

So there are some good value wines to be had, if you are prepared to spend a little bit of time to look at the list, or if you ask for my advice. At the end of the day, my job is to help you to find a wine that you will enjoy, at a price that you are comfortable with, to enhance your dining experience. Im not in the business to screwing people over, ripping them off or trying to flog them overly expensive wines. More often than not, I will recommend something under the customers budget. For after all, its all about establishing the rapport with the guests and encouraging them to return again.

7 comments:

Anonymous said...

All well and good, but these so called value wines cost you no more than £9-10 a bottle and I suspect i'm being generous here.

grazza said...

Im not going to get into the whole tired arguements about margins. I think my views on the subject have been amply stated here and on many other forums and blogs.

Anonymous said...

Again all well and good, but to use your own argument, the very wines that you extoll the value aspect of, are exactly the wines that you make the highest margins on!

So my question here, is how exactly does that constitute value under $50?

grazza said...

Ok fair enough, perhaps I wasnt clear on my original posting. The three wines quoted are on reduced margin because they are too marginalised or unknown to sell at the "appropriate" margin. So they are somewhat better value for money. I also feel that they deliver a lot for their price (retail not marked-up) which means that the quality to value ratio is better than a lot of wines at their price point.

Anonymous said...

Bin 391 Planeta - Cerasuolo di Vittoria, a Frappato, Nero d'Avola blend from the only DOCG vineyard in Sicily. Rich cherry fruit flavour with a beaujolais style lushness and accessability, a positive steal at £35.

Cerasuolo costs around £8 per bottle. Selling for £35 is 23% cost or 77%GP not my exact idea of value.

grazza said...

Id better shop around then, cause thats a fair bit cheaper than Im buying it for.

Anonymous said...

£7.33 excl VAT from Enotria FYI ;-)