As we wine lovers know to our cost, literally, drinks sales are a key contributor to restaurant finances. Nick argues that many businesses will have to adapt their wine lists when they finally reopen after lockdown. A version of this article is published by the Financial Times.
The success of any restaurant depends on various factors – its location and its rent, of course. The wine list and the ingenuity of the kitchen brigade are also important. Less tangible is the warmth of the front-of-house team.
Behind all these lies a phalanx of essential ratios, such as rent to turnover. Two that are crucial to the conscientious restaurateur are the ratios of drinks to food costs and of drinks sales to overall sales. In a perfect world, these would both be 30:70. Ensuring that your restaurant achieves this magical sweet spot is as much down to good luck as good management. The aim is to strike the right balance between encouraging the sale of alcohol – easy money – and creating a respected establishment with a reputation for good food and service. Too high a proportion of alcohol sales and the establishment risks turning into a pub.
Food and drinks sales are achieved differently. Food sales involve the transformation of large quantities of raw ingredients by numerous, talented and, therefore, expensive individuals. Naturally, this creates a high cost base.
Drinks sales are almost the opposite. There is little expertise in pouring a gin and tonic, for example, but there is a hefty margin. So too with wine. Indeed, in the past a good restaurant with an interest in wine used to plough previous years’ profits into its wine cellar. But I wonder how restaurants will be able to adapt their wine lists in the wake of the coronavirus?
Under lockdown, there has been a massive switch in wine sales from businesses to households. This means consumers are more knowledgeable than they were about costs and, therefore, less likely to accept a restaurant’s large mark-up on wines. This could have serious implications for the food to drinks sales ratio.
And which restaurants will be able to offer a wine list that bristles with expensive gems?
Maintaining sufficient cash in the bank is essential to the survival of restaurants and if this means liquidating even your most precious assets, then so be it. But if restaurants do sell part of their cellars to help their finances in the current crisis, how will they maintain their appeal without them?
Then there is the question of how a wine is chosen from a post-pandemic list. Let’s assume that for several months at least, there has to be some form of social distancing and the waiters, including sommeliers, have to wear a face mask. While the kitchen is often behind a swing door, wine service is radically different. It is more personal, more colourful, more expressive and more theatrical.
Many bars and restaurants feature dramatic displays of wine bottles – none more so than Charlie Palmer’s Aureole restaurant in Las Vegas. Inspired by a scene from the original Mission: Impossible film from 1996, Adam Tihany designed a four‑storey wine display above the bar with bottles picked out by young women suspended on wires known as 'wine angels'. While few restaurants have the space or architecture for such a performance, they might have to apply the same level of creativity to replace the more intimate, pre-COVID-19 presentation of their wines.
If restaurant wine lists become less attractive, if their displays are forced to be less exciting, and if, in the short term, wine service has to be less personal, this will hurt the all-important drinks to food ratio.
Successful restaurants need to be all the things I mentioned in the opening paragraph – and more. But, above all, they need to be profitable, and wine sales will have to play a decisive but very different role in the future.
John Ragan MS, wine director, Union Square Hospitality Group, New York adds this:
We’ve had lots of speculative conversations about how our restaurants – and wine in particular – will change post-COVID. Here are a few thoughts we have had so far:
- There could be less experimentation in wine and more attention paid to known classics.
- Value for money will be more important than ever – there will be less focus on 'trophy wines' and more on what sommeliers call 'workhorse wines'.
- Smaller, more compact wine lists, which minimise investment in stock, will predominate.
- There will be fewer paper wine lists – there might be a move to put wine lists on iPads, but that can be problematic in terms of hygiene as well. More casual restaurants will return to chalkboards.
- More guests may choose to pour their own wine, wishing to minimise the number of people handling a bottle.
- Wines by the glass will be increasingly common.