Mark-up mayhem
Few restaurateurs could have been cheered by the predictions in Which? Books' recently published Good Food Guide 2001. "The restaurant bubble may be bursting," claims an accompanying press release, while the guide's editor, Jim Ainsworth, writes, "Those [restaurants] motivated by greed are now reaping the consequences, as even well-off customers are finding the high prices unacceptable."
Ainsworth adds: "If this trend encourages some restaurants to moderate their prices, and their add-on charges, so much the better." And he slams "brutal" wine mark-ups for their contribution to "extortionate" prices in restaurants.
Growing criticism
Fierce criticism of the restaurant industry's wine mark-up policies is certainly not news, but in a country that seems to be growing ever-more sensitive of its "rip-off Britain" image, it is the wise restaurateur who will take such criticism on board.
We all know that rents, particularly in and around London, are high, that labour costs are a continuing battle and that competition is fierce. Yet not all restaurants use industry-standard mark-ups on their wine.
In terms of competition, there is little doubt that London is a difficult, and fickle, marketplace. Yet even here some adventurous restaurateurs have jettisoned traditional mark-up policies in favour of lower-priced wines.
One such is the Loft, the restaurant of the new Mercure hotel, which opened in London's Borough in May. Wine buying is done centrally and is applied across the group. The Loft has two wine lists, the "normal" list, with standard mark-ups, and a 14-bin "grand vin" list, with £5 mark-ups on wholesale prices across the board. For example, the grand vin list has a Chablis Premier Cru Fourchaume 1998 from La Chablisienne for £17, while the normal list has a standard Chablis 1998 on sale for £22.
Restaurant manager Pino Dispinseri admits that the two lists can cause some confusion. "I do have to point out that there is better value on the grand vin list," he admits, adding that some customers are put off by the name.
It is too early to tell whether the Loft and its mark-up policy will be a success but, according to Dispinseri, public reaction has been "very good - it has been very appreciated".
Dispinseri, though, is cautious about claiming the policy an unmitigated monetary success, saying that the £5 mark-up scheme is "a good marketing tool".
Also in London, but away from the city's centre, is the tiny Terrace restaurant in well-heeled Kensington. Here, owner Steven Loveridge operates a similar two-list approach. "What we do is have a main list of about 40-50 wines; then I have a fine-wine list. For this, we buy in mature Burgundies and the like and have a £15 mark-up on the wines." As with the Loft's list, wines on the main list receive standard mark-ups.
Asked why he has set up his wine list in this way, Loveridge says: "I'm not sure, really. About two years ago we started the policy; before that, we had a price cut-off, but I thought there was a demand [for more expensive wines]."
In the past three months Loveridge has sold about 10 cases of wine from the fine-wine list, which works out at just over a bottle a day.
He admits that the enviable postcode helps shift the wine, too. "Where we are located, people like going out and spending money on wine. [Our policy] has been very popular with our diners. Not many people are doing what I'm doing, but I've been very pleased with the result."
Earlier this year, former Londoner John Gilchrist upped sticks for the countryside - well, the outskirts of Milton Keynes, in Newton Longville - to open the Crooked Billet pub. Gilchrist, formerly sommelier at the 1837 restaurant in Brown's hotel, was, and remains committed to, an energetic wines-by-the-glass policy.
At the Crooked Billet, Gilchrist has taken a characteristically maverick approach to wine mark-ups. "I'm one of the only people in the country who operates a cash mark-up," he says. "Basically, I have a minimum spend of £10 per bottle, regardless of how much it costs me. So, anything that costs me under £5 wholesale, I'd charge £10 for. Between £5 and £35, I double the price. Anything that I pay more than £35 a bottle for, I have a £25 cash mark-up on. So, the more expensive the wine, the better the value."
Gilchrist is critical of the pricing policies of some restaurants. "Prices in restaurants are ridiculous," he says. "The high wine prices are there to subsidise the food prices." He brought in his cash mark-up policy because he likes "to try to encourage people to drink better-quality wine".
Nick Borst-Smith of the Nobody Inn, near Exeter in Devon, operates a similar policy. "We have a sliding scale," explains Borst-Smith. "Basically, anything that we buy for under £5 we multiply by two. From £10 to £20, we multiply the wholesale price by 1.8. For wines £20 and above, we charge according to the going market rate and what we picked it up for.
"That seems to work. Every wine we have on the list sells. But there are no strict rules - we prefer to sell the wines and have some fun buying more."
Again, location was a factor in developing the restaurant's mark-up policy. "We're a country inn, so people buying wine here are doing so because mark-ups are reasonable," he says.
Meanwhile, Andrew Hetherington, co-proprietor of Fairyhill country house hotel in Reynoldston, near Swansea, operates a rather different policy. "For the majority of our list, we do a boring 300% mark-up on the wines," he says. "But we're famous for our claret. We have 200 of them on our list, as well as 100 red Burgundies and 50 white Burgundies. The way we do these wines is to mark them up at 200% of the auction price."
Rather than having an ordinary list and a fine wine list, Hetherington has just the single list and does little to draw customers' attention to his pricing policy.
Nonetheless, his well-priced list has won him accolades from both The Good Food Guide and the US wine magazine Wine Spectator - not to mention the well-heeled, well-informed clientele that go with them.
Fairyhill incorporated its current wine list policy about four years ago, and has seen a difference in customers' reactions. "We've attracted more people who are into wine, as ours is no longer a ‘normal' list," confirms Hetherington.
Ultimately, restaurateurs are not in the job out of a sense of altruism. Encouraging people to widen their vinous horizons by lowering prices is a laudable aim, but such a policy can be expensive if it doesn't go exactly to plan. Loveridge explains: "At the £60 price point, things can get tricky. At this price, if you get one corked bottle in the case that you can't sell, you lose the profit margin on the whole case."
Like any other business, restaurants have to make money to survive. But, if the ominous portents of The Good Food Guide hold true, change may be in the air. And if that's so, jungle rules apply: survival not of the fittest, nor necessarily the biggest, but of the most adaptable. And that means thinking about more than just the menu. n
