|Monday April 2, 2001
Brendan and I have spent some time today responding to a great E-mail from Mark Brown concerning "restaurant wine pricing" I agree with most of what Mark has said and what Brendan has responded. I can't understand how the California restaurant establishments have decided to rip us off (we consumers) to even a greater extent than the wineries. I have complained about the incredible pricing of the Napa valley cabernets that are selling for over $100 a bottle, but as most of us know in California, where wine is consumed liberally in restaurants, there is a greater mark up. I assume that states that do allow wine to be served ( some don't) also charge high prices. I have asked those in the restaurant business why they charge so much. They say they have to make up the cost of food. Now that is no excuse. Why should we wine lovers be taken advantage of because we love wine? Why don't these restaurants raise the price of their food? Why do these restaurants charge a corkage fee now ranging up to $50+ a bottle? It seems we are captive more in a restaurant than in a wine shop. In a wine shop we can choose not to buy a $100 bottle of wine, but in a restaurant if we bring in our valued wine that we purchased at reasonable prices, we are still charged a corkage fee of between $10 and $50+ for the right to drink it. If we don't choose to bring in our own wine we have the right to buy a wine for $30 to $200+ that we could buy in any local retailer at $10 to $100. I hope this doesn't encourage these restaurants to charge even more for their food: BUT why don't they raise the price of their food; that way they won't be taking advantage of us? I know we see places like the French Laundry charging twice as much for their food than less established restaurants, but isn't it interesting that Napa cabernet producers are charging as much as 5 times the cost of less established producers of good wine. I am afraid that what we will see in the future is that these so called high class restaurants will charge an increasing amount for there food and then continue to charge even more for the wine.
That is my small input into this subject and here is Brendan's response to Mark Brown's public forum E-mail:
I have been thrilled to see the responses and discussion about retail wine pricing that Dave and I have spawned. One additional neglected off-shoot of this pricing debate was brought to our attention by one of our customers. He pointed out that although retail pricing can be bad, restaurant pricing is absolutely ludicrous. We fully agree.Brendan is an interesting guy and I am fortunate to be associated with him in our venture to achieve great wine and have him as a good friend.
Wednesday April 4, 2001
I Need to comment on a few of your replies to Brendan's and my restaurant pricing criticism. But first I must mention two other matters.
Tomorrow I have decided to have Lasik performed on both of my eyes. I have 20\400 vision so this will be an interesting event in my life. I will still have to wear glasses to see close, but it will be interesting to finally be able to see in my shower.
I must also make a comment on the frost all of the wine country experienced this morning. The good news for us is we have no damage, the bad news I am sure we will hear that some of our fellow vineyard owners will confirm that there was indeed some loss of crop. Many areas in Sonoma and Napa Counties are more sheltered and thus more susceptible to cold weather. To damage the potential crop on a grapevine requires temperatures below 30 degrees. This morning we reached 30.5. Tomorrow, there is a prediction of higher temperatures, but the temperature tonight at this time is much lower than last night.
There has been some postings in the public forum that I need to comment on. A. Simpcax has stated some presumed facts about our operation that I need to respond to. I have not heard this name before, but do know he or she is a customer of ours.
First of all I agree that we will hopefully sell half of our potential production at $13 a bottle, but there is no way we will average $17 for the remainder. We have just gone to $16 on our 2000 offer and we have sold 80% of our 2000 wine. 10% of the remainder of the wine will be held for retail at $15 a bottle. So to be more accurate and respectably correct Simp, our average bottle sales price will be closer to $15. That still leaves a gross of $600,000.
Now, I don't deduct the amount of money I could gain from selling my grapes from this gross. I like to consider this source of fruit as free. I pass it on to you. So we are back down to $140,000. Now, that does not include the expense of the new building we are constructing or equipment we buy every year. Actually, I expect that our cash flow will be balanced. We will spend the same as we take in. Without the building and new press draining us next year, I am hoping that we will be taking in more money than we dish out.
I must mention that part of the reason for my posting about restaurant operations is that I have always wanted to start a bistro. I don't like the late hours and I don't want to be the cook this late in my life, but I would like to bankroll such an operation---only if I had complete control. I can guarantee you that the wine we sold in our bistro would be only $5 above our cost. I don't agree with Brendan or some of you others that claim that wine prices at $5 above retail is fair. Remember that these restaurants buy the wine at wholesale and mark it up on average 250 to 300%. Brendan proudly states that the restaurant he had worked for is probably charging ONLY $5 above retail even now. You must remember that if this restaurant buys a wine for $15, that retail markup would be $22.50. If they mark up the wine $5 that equates to $27.50. Thus they are making a profit of 83.33%. Not bad for just opening the bottle and providing some glasses.
Sure, all of you who are cooks, and buy the food you process for your family at home, know the cost of the food at a grocery store is one third the cost of food in a restaurant. Of course we have to provide the labor, but we sure have saved a great deal of money. Restaurants have many expensive, I am sure, that I have no clue about. (please I need input from you restaurant owners---if you are not too busy to read this diary) But, I still ask why they charge so much, for wine or for that matter other drinks, when it costs them so little to serve it? Is it tradition? Again if I was associated with a bistro, I would charge what is fair for all drinks. Am I clueless, probably, yes. I do know that a business establishment must know cash flow: --the balance of money that comes in and what goes out regardless of profit or taxes.
Thursday April 5, 2001
This will be just a quick note to let everyone know that I made it through the operation (Lasik) to correct the vision in my eyes. I am having a great deal of trouble seeing--not because of the surgery, but they have taped some protective goggles over my eyes so I don't rub them. These pieces of glass are thick and distorted, but what I can see through small holes is encouraging even 5 hrs after the operation.
Also I wanted to inform you that we did get down to 33 degrees this morning with no damage.
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