Page 99 of Bibendum Wine Ltd’s 2006 Trade List reveals a vital, if unappetising, aspect of restaurant life.
Headed Gross Profit Table it lists down the left hand side the ex-VAT price points of many of the £25 million worth of wine the company sells to restaurants, hotels and increasingly to gastro-pubs. Across the top are the three percentage points most restaurateurs apply to the cost price, 60, 65 or 70%, and below these are the sales prices calculated to include VAT and to ensure that the wine list generates the necessary profits. The differences are marked: a wine that costs £5 can sell at £14.70 with a 60% GP or £19.60 with a 70% GP whereas a £10 bottle sells at £29.40 at 60% GP or £39.20 with a 70% GP.
I was handed the list by Willie Lebus, responsible for the 35 strong Bibendum sales team, whom I had invited to lunch along with David Gleave, MD of Liberty Wines. Liberty sells a further £10 million worth of wine to British restaurants and last year increased its volume of wine sales to restaurants by 60% last year as turnover rose by 40%. We met at Arbutus in Soho, which neither company supplies, and which has the distinctive policy of selling each of its 70 wines by the bottle and the 250 cl carafe.
While Lebus was full of admiration for this approach, and was subsequently to make the lack of an exciting approach to writing their wine list his main criticism of British restaurateurs today. But he was also quick to see the possible downside, that if the restaurant did not manage to turn over its opened, expensive wines quickly enough the potential loss would swallow up the anticipated wine profits. While Will Smith, Arbutus’s manager, concurred, he believed that once they reached their target of 50/60 customers at lunch and close to 100 in the evening this would not be a problem.
As we waited for Gleave, I asked Lebus why there are relatively few wine merchants specialising in supplying restaurants. Bibendum and Liberty aside, the market is principally in the hands of Enotria Winecellars, Les Caves de Pyrène and Berkmann Wine Cellars, all of whom are dwarfed by Matthew Clark and Waverley Vintners who tend to specialise in sole-supplier contracts to vast numbers of hotels and restaurants.
“It’s a function of logistics,” he explained. “Most modern restaurants have very limited storage space and don’t want to have too much cash tied up in stock. To be able to service them properly you need a first-class distribution service to ensure next day delivery with a second van invariably on standby; an IT system of similar quality; the capital to be in stock of the 1,250 wines we list and a sales force on the road to add value to our restaurant customers.”
As Lebus was finishing, Gleave arrived and succinctly explained the differing business principles behind the profession of restaurateur and wine merchant. “We tend to work on a gross profit of 22-25% whereas most restaurateurs aim for 70% and I do understand why a restaurant’s cost base, certainly in London, mitigates against anything lower. Most restaurants go under because either their margins are not right or because their costs are not under control. But I would much rather have a restaurateur who makes a good margin and pays his bills on time than one who pays late. Cash flow is usually not an issue for a restaurateur but it is absolutely critical for our business.”
I chose Gleave and Lebus specifically because, while their respective firms have shaped many restaurant wine lists over the 20 years they have been in the wine trade, they come from very different backgrounds. Lebus, 52, is an ebullient Old Etonian who specialises in loud shirts and bow-ties while Gleave, 49, still retains the physique from his ice-hockey days growing up in Canada. Both share a propensity for good food, good wine and a world full of busy, friendly restaurants.
But how, I wanted to know, could a non-wine expert make best use of a restaurant’s wine list? Lebus began in typically enthusiastic fashion. “With so much good wine being produced at all price points around the world there really is no excuse for a bad wine list any more. But more specifically, unless you know the restaurant well, avoid the second and third least expensive wines, as that is where the restaurateur will invariably try to maximise his profits.” Gleave opined, “If you are interested in wine avoid Sancerre, Chablis, Australian chardonnay and Pinot Grigio and, if possible, some of to-day’s better-known names. Our best selling white grape variety today is not chardonnay but sauvignon blanc from New Zealand.”
Gleave continued that wine lists invariably follow the 80/20 principle with, in this case, 20% of any wine list generating 80% of the sales so it is always worth looking further down the list to where, as he put it, ‘the fun starts’.
The five wines they had brought to drink over lunch fell into this category, wines which cost £20-£30 on most wine lists where as Lebus put it, ‘the action is.’ They are Martius 2005, a full Spanish rosé; Oreja Negra, another rosé this time from Chile; a Pieropan Soave Classico 2005; a Pinot Blanc 2004 Vielles Vignes from the Co-operative in Ribeauville, Alsace and a Pinot Noir from Delta Vineyard in Marlborough, New Zealand.
The presence of two rosés led Lebus to explain that one of the biggest changes he had seen over the past 20 years had been the growing popularity of this style of wine. “In the past,” he explained, “sales used to just stop in September but now rosé sells all year.” That three out of the five wines also had screwcaps did not surprise me but the impact that this innovation has had on wine sales to restaurants certainly did. According to Lebus screwcaps have ‘revolutionised our business’ while Gleave added ‘that we seen a significant increase in sales for every wine with a screwcap.’
Gleave continued, “Its impact has been two-fold, I believe. Firstly, because wines do stay fresher under screwcap the technology has not only increased the restaurateur’s ability to offer a broader range of wines by the glass but simultaneously reassured the consumer that what they order will be as good as it should be. And secondly it has eradicated one of many restaurateurs’ worst habits of pulling the corks on far too many bottles before a party or a busy lunch service, stuffing the corks back into them when they haven’t been used and selling them off over the next few days. That has invariably put people off ordering wine.”
When Gleave continued that one of the reasons screwcaps had been so successful was that they had been so warmly embraced by sommeliers, or wine waiters, this provided the opportunity to ask their opinion of the profession which chooses, buys and sells their wines. There was initial enthusiasm from both with unanimous praise for how sommeliers had changed significantly over the past decade since the French monopoly had been broken. “The arrival of numerous non-French sommeliers has really been a big bonus for restaurant-goers,” Gleave explained, “as many of them have come to it from other aspects of the restaurant business, some even as cooks, so they are much better team players than someone who has just been in wine service. This definitely improves the restaurant and therefore customer service.”
Lebus’s main criticism of sommeliers was that he felt that they spent too much time buying and tasting and not enough time advising their customers on what to drink. But this was part of a more general complaint that British restaurateurs are not being innovative enough. “So many of them have gone over to shorter menus that change very frequently, why don’t they do the same with their wine lists? Or have wine specials as they have food specials?
There is no doubt that consumers’ palates have become more sophisticated and we have the wines to excite them and it would be wonderful if more restaurateurs shared that excitement.”
For many restaurant-goers it would be a great pity if Gleave, Lebus or their colleagues were ever to lose their obvious enthusiasm for supplying increasingly exciting wine to restaurants. But as lunch drew to a close I discovered why specifically supplying restaurants, rather than supermarkets or off licences, still excites them, reasons that go beyond eating out probably more frequently than those who write about restaurants.
For Lebus it is the immediacy of the response. “We can appreciate changing taste patterns much more quickly through restaurants than anywhere else and as result we can pass this information on to the winemakers we deal with round the world so that their wines can evolve to meet this discerning market.” For Gleave, however, it was more down to earth, “As most restaurants’ wine lists operate on this 80/20 principle it does mean that there is a very significant market to sell interesting, well made wines to. This isn’t the case with the retail trade anymore where the dominance of the supermarkets has so limited the range on offer. I sell a great riesling from Mount Horrocks in Clare Valley, Australia and 85% of its sales go via restaurants. Without these sales it wouldn’t be worth importing.”