Margins of error

How you manage your mark-up on this can make or break your customers’ opinions of you.

How you manage your mark-up on this can make or break your customers’ opinions of you.

How do you translate the LUC of drinks to an on-premise price without upsetting your customers?

Now that all Australians are accomplished chefs and can cook anything, and now that all Australians are also qualified restaurant and food critics, a strange cultural shift has taken place. More and more customers feel more and more comfortable inside a restaurant. Thanks to the mass popularity of TV cheffing, Australians aren’t afraid when dining or lunching out anymore. Indeed, customers are bringing a kind of smug forgiveness to restaurants. Without the fear they’ve lost the angst. But they still get cranky about one very big thing. They might be charmingly condescending about your foamed wagyu organic porridge, but they loathe the perceived daylight robbery of the wine mark-ups.

Smart operators, of course, manage to massage the LUC-to-on-premise-price nicely; it becomes an enjoyable outcome for all consenting parties. There is a range of ways to do this. You need to employ a raft of tricks. Because if you don’t, you’re either going to go out of business or miraculously become a profitable, arrogant destination venue wherein you can charge what you jolly-well like for wine. I think we all know which result is more likely.

Little-known boutique wines

This works on the very basic principle of non-disclosure: if diners don’t know how much a wine costs in retail land then they will judge the reasonableness of its restaurant price based on (a) the price, (b) the prettiness of the label, (c) the grape variety, and (d) the region – depending on how much they know about wine. Hence Seville Estate Barber’s Range Pinot Noir ($14.62LUC, Domaine Wine Shippers,; it gives you pinot poshness and Yarra Valley cachet with a price you can do things with.

Unknown imported wines

Similar principle to the above, but with even more sea room. The focus here needs to be on wines that have some trendy regional currency. Ten years ago Italian wines worked well in this equation; nowadays Spanish wine is the way to go. Tempranillo is rolled gold for inner city bars; but some other Spanish red varieties are starting to go trendy—such as mencia. Telmo Rodrigues ‘Gaba do Xil” Mencia 2008 ($22LUC The Spanish Acquisition, is the sort of attractive, perfumed, plummy red wine that’s only 12.5 per cent AVB. With great drinkability and smart acid, it’s a very refreshing beverage and a versatile background to food. In other imported areas you see some operators trying to clean up on South American wines, but the problem here is that too many of the wines from Argentina and Chile are already too cheap at retail level. Also keep a weather eye on the growing number of Portuguese reds starting to make sommeliers swoon.

Second label marquee brands

Smart winemakers learnt a long time ago that if you have a well-recognised, high-quality brand, you should leverage the power of that brand by introducing a more “affordable” younger brother to the equation. In other words, a second or entry-point wine that sold principally on the family name, as long, of course, as the wine in the bottle was of a good standard. A good example of this is Leeuwin’s Estate’s “Siblings” range. Leeuwin Estate Siblings Sauvignon Blanc Semillon 2010 is $15.59LUC. Whereas the Art Series Chardonnay 2008 lands at $62.35…(Fesq & Company, The sav/sem gives you the name for a quarter the price.

Self-selling labels

In a very cyclical manner there are always wines going around that seem to carry the imprimatur of the gods. These wines can do no wrong. A combination of price, contemporary wine style and flavour, and some good media endorsement help to lift such wines up a few notches. Three wines in this part of the atmosphere at the minute are Oakridge in the Yarra Valley (Over the Shoulder Chardonnay 2010, $15LUC, Bibendum Wine Co.,; Josef Chromy from Tasmania (Josef Chromy Pepik Pinot Noir 2010, $19.35LUC, Vinous Solutions,; and Margaret River’s Vasse Felix, which must have one of the best-valued, high-quality reds currently of voting age (Vasse Felix Cabernet Merlot 2008, $15.89LUC, Samuel Smith & Son Pty Ltd,

Honest bargains

This is a little like the loss-leader principle used so effectively by a certain national liquor chain. I’m not suggesting that any restaurateur would actually sell wine to your customers for less than you bought it, but putting one reasonably well-known white wine on your list at a price that’s affordable to the minds of your customers, and, well, you’ll win a lot of customer loyalty. A particular Melbourne restaurant has practised this for years with Tahbilk Marsanne ($10.75LUC, The Wine Company, It sits on the list at about $5 more than a good discount retail price. It works because it satisfies wine-list price snobs, it gets customers going, and because the relatively unknown nature of the variety—marsanne—won’t cannibalise your chardy and sav blanc sales. How much time you want to spend maintaining this sort of wine pricing strategy is another imponderable. Some are happy to let distributors handle most of the nitty-gritty, imagining they are getting good deals, good wine, and no hassles. This can only work well for you for so long, however. Wine—like every aspect of the restaurant game—has to be worked.

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