Wine: Catering to Younger Consumers

Pour for Profit: Restaurants can attract younger diners and still make money by adding variety and subtracting markups
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On a public-radio program recently, I was interviewed along with a representative of the Michigan Restaurant Association about trends among today’s younger restaurant-goers.

What we didn’t get into, and I wish we had, was the question of pricing driving off young consumers, including the high price of wine in restaurants, which is now far greater than food.

It’s not news that restaurants have experienced a loss of customers nationwide in the recent recession. But some food trade organizations and analysts have noticed that the greatest drop is in younger consumers, precisely the diners restaurants need to be adding, not losing.

Nation’s Restaurant News reported this trend last fall, and economists have noted that younger people have been the hardest hit by the recession.

In restaurants, meanwhile (in case you haven’t noticed), the average cost of a bottle of wine is now the biggest item on the bill; running almost half the total cost of a dinner for two — before tax and tip.

Look at the costs. An average first course hovers around $10. A main course is about $20 or more. Add a salad or a dessert, if you wish, for, say, $8. That’s $38 per person, or $76 for two.

And a bottle of wine? Well, good luck finding anything worth drinking on a wine list under $30 these days. And $40 to $50 is the more likely price point of worthwhile wines.

So now you’ve got about a $100-plus tab for two, not including tax and tip — this for a mid-week meal, never mind something really special.

When you factor in the actual cost of the wine to a restaurant, you begin to realize that wine is the most profitable part of any tab. The food costs less, but its cost is actually greater because of the preparation, the kitchen, the equipment, the chef who must be paid, the dishwasher, and server.

But the bottle of wine? Well, for many years, restaurants have, on average, marked up a bottle of wine by 100 to 200 percent over wholesale. Yet, wine requires nowhere near the labor of food. It needs only storage, plus the time and labor involved in the minute or two it takes to bring it to the table, give three or four twists of a corkscrew, and pour.

Sure, restaurants should make a profit. But it’s the proportion of the profit I question. Would they see 25 to 50 percent over wine wholesale, rather than 200, to be reasonable? No, because their business models would need to be severely adjusted.

Anecdotally, wine retailers say the younger generation of wine drinkers, the Millennials, seem much more explorative than their parents. They’re willing to dive into wines made from grape varieties such as verdehlo, tokay, albariño, and molinara — all generally less expensive.

So, why not cater to their tastes and encourage them through lower prices and more variety in restaurants?

One restaurant breaking that barrier is Toasted Oak Grill and Market in Novi, which combines a retail shop, delicatessen, and restaurant. You can select any bottle sold in their retail shop, ask the server to pour it with your meal in the restaurant, and they’ll charge you $7 over the shelf price.

Now, that’s smart and very appealing, and a good way to get new, younger customers to keep coming to your restaurant.


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