Restaurant Wine: A Double-Sided Puzzle

If there is one thing that wine enthusiasts have in common (maybe the only thing?) it is their frustration with wine in restaurants. I was reminded of this fact as I read through the weekend newspaper wine columns. Lettie Teague’s Wall Street Journal piece is an extended rant (or maybe she’s venting and not ranting) about wine-by-the glass in restaurants.

The Confidence Game

Teague can’t decide which is worse in restaurant wine-by-the glass programs — the price or the quality. The rule of thumb is that restaurants charge as much per glass of wine as they actually paid for the whole bottle (and sometimes even more). This makes her feel ripped off. At the same time, the wine has been sitting around open for who knows how long, losing some or all of its freshness.  Fancy wine storage systems can help with this, but still it’s difficult to order a glass of wine (sometimes for $25 or more) with much confidence.

Over at the Financial Times Nicholas Lander approaches the issue from the business side and  looks for a solution in cooperative arrangements between wine collectors (who are willing to sell off some of their stash at market prices) and restaurants who offer these wines to their customers at reduced mark-ups.  The collectors get a fair price on their investment, the restaurants get a middle man return without big up-front costs and customers get access to special wines at lower prices. A great idea, but perhaps hard to scale-up.

Restaurant wine is like a double-sided jigsaw puzzle. The same pieces have to fit together to form two different appealing pictures — one for the customers and another for the business. If any of the pieces are upside down or missing, the whole experience is ruined.

Putting the Pieces Together

Not that it is impossible to put it all together. One of my most completely satisfying wine experiences of recent years was a dinner at The Black Rabbit Restaurant at Edgefield, a funky old  hotel in Troutdale, just outside of Portland, Oregon. A bottle of  the stellar 2006 Fielding Hills Cabernet Sauvignon sold for the same price that the winery was charging at that time — what a deal! It wasn’t the only good value on the menu, either. (The current wine list on the Black Rabbit website lists a 2007 Ken Wright Cellars McCrone Vineyard Pinot Noir for $60. I saw the same wine on another wine list for about $200. Where are my car keys?)

How can they do it? Well, Edgefield is an unusual operation.  It is an affordable destination hotel housed in a former Depression-era poor farm (really!) with its own movie theater, winery, brewery and distillery.  The owners can afford to sell their own wine at good prices and the rest of the list falls into place around those wines. Edgefield is part of a regional chain of restaurants and hotels, so some scale economies may exist, too.

Constantly Disappointed?

Edgefield shows that it is possible to put the pieces together to everyone’s satisfaction. But is it the model for restaurant wine programs generally?  Obviously not. Like Lander’s proposal it is too much of a special case, but it shows that there is hope for constantly disappointed wine enthusiasts. Unlike a real jigsaw puzzle, which has just one solution, I think there are probably many different ways to put the pieces together to improve the restaurant wine experience.

Flemming’s Steak House offers 100 wines by the glass at its restaurants, for example. Although Lettie Teague is appalled by this for the price and quality reasons noted above, the broad choice may please many customers.  After all, we are accustomed to choosing from a huge wine selection at competitive prices at supermarkets and wine shops. Even a very large restaurant wine list (say, 300 choices) is tiny compared with your local upscale supermarket, which may have 2000 or more wines on the shelves.

The fact that the restaurant charges a semi-monopoly price (hard to get a competitive bid once you’ve been seated) makes the situation more frustrating.

One solution is to loosen the monopoly hold on price, which some restaurants are doing right now by reducing or eliminating corkage fees. Bring your own wine (purchased at normal retail prices) and enjoy dinner and a wine experience. Since wine is typically the highest priced item on a restaurant bill (more expensive than the entree, for example), reducing the wine cost removes a disincentive to dine out.

I don’t think many customers take up the “no corkage fee”  offer, but some do and if treated well they are likely to return to dine again. If there are conditions on free corkage (the wine cannot be on our list, for example, or free corkage on one bottle if you purchase a bottle from us) they need to be clearly stated to avoid misunderstanding and hard feelings.

Wine-by-the Keg?

The continuing recession is putting more strain on restaurant wine programs, which is unfortunate for everyone involved. But perhaps it will also spur the search for creative solutions to the double-sided puzzle problem.

One interesting approach to the wine-by-the-glass problem, for example, is keg wine — wine packaged in reusable steel containers. Cheaper per unit than bottled wine (assuming that the keg can be returned and refilled efficiently) with a reasonably long quality shelf life if properly tapped, keg wine may be the rosy  future of restaurant wine-by-the-glass.

Someone should tell Lettie Teague the good news.

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Thanks to Michael and Nancy Morrell for their assistance with this report.

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2 responses

  1. Interesting that BYO wine is making inroads into the US restaurant market. It’s been around for ages in Australia (first introduced to get around restrictive licensing laws, and then kept on as down-to-earth Australians refused to pay silly mark-ups for wine – at least that’s the lore); and it does make the whole restaurant experince more pleasant/affordable.

    We moved to Sydney a couple of years ago from London, and we find that we go to restaurants much more often, partly because a restaurant meal with excellent wine doesn’t break the bank.

  2. As a person that has spent time on several sides of the equation (sommelier, wine sales etc), I too share Ms Teague’s wine pain and/or frustrations. A topic near and dear, so rant away I shall! I am kidding, my observations:

    As a sommelier there can be great pressure from the “top down”; restaurant management/owners, to run the beverage department as (often is the case) the main profit center. A mantra, to maintain the “industry standard” of costs, say 25-30%”PC” (or product cost) resounds the industry over. Now, this would drive me crazy as a sales person. I often would gently present the concept that if said industry standard were ignored, prices could drift lower and in turn sales might drift higher. Why not have a couple or table of four enjoy several bottle through the course of a great dinner, than to have their dining experienced hamstrung by exorbitant markups on the wine. I would say (yell), lower prices, sell more, take more money to the bank. Tell THAT to the owners!!

    On the quality fron however, I’m not sure that I entirely agree. I feel that the average wine available btg is better than ever (acknowledging that that is a relative comment) . With only part attribution to the buyers doing the selecting and the other going to wine-makers all around the world making better and better wine at every price point.

    On the issue of pricing, here’s an observation that I have made over the past year or so (post “crisis”?) that is driving me crazy: since when is a “glass” of wine around 4 ounces? That’s the trend that I have noticed. Its all about costs, but it is a smoke and mirror attempt at fooling patrons and maintaining or increasing prices: charge the same, just pour less. Uuurrrgh, and NOW the restaurant is more likely making 5x the cost of the bottle!!!!

    The issue of bringing wine into restaurants has and will always be a thorny one here in the wine-producing state of California. I believe that it is far more common here than in any state in the nation, albeit the bain of the existence of many a wine directors (trying to maintain their department’s “industry standard” of costs!). I full take advantage of the culture here in CA; however i do want to go on record acknowledging that it is a tight-rope act. The patron must assume the responsibility of not penalizing the server/staff (by not purchasing a bottle, and thus not tipping or working in a restaurant that is liberal in its policies), ie tip well. And, i think the whole act should be viewed as a “privilege” not a “right” to bring a bottle to a restaurant; the former goes a long way to promote good relations between restaurants and those of us that bring bottles. I have friends that are guilty of the latter and I loath their behavior when dining.

    I feel the “system” or wine-industry needs to be shaken up or dusted off in so many areas (eg – can we banter some time about the archaic three-tier system please?). So lets keep our voices heard as consumers and let the revolution commence!

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