To keep sales flowing during the recession, more restaurateurs are letting guests bring their own bottles of wine to enjoy with meals, signaling a shift in the way many operators do business.
Historically, wine has been an item with a large markup, helping boost both sales and margins. But the growing popularity of “bring your own,” or BYO, programs reflects the sourness of the economy. Operators are willing to shrink tabs and forfeit some of their own income in order to keep spending-shy consumers coming in the door. Some operators that have long embraced BYO programs are even reducing their corkage fees.
“Restaurant owners are finding right now that it is still a challenge to get people in their seats,” said Devon Siegel, chief executive of DiningInfo, a firm offering data on full-service restaurants nationwide. “People still want to treat themselves to nice meals, but they are looking for ways to cut costs in other areas. BYO programs afford them the ability to do that.”
According to a recent study by DiningInfo, approximately 15,000 of 50,000 restaurateurs surveyed said they now allow diners to bring their own wine with them. The study was released in conjunction with the launch of the firm’s new sister website,
“I absolutely think the economy is the mother of a whole lot invention these days,” said Danny Meyer, founder and chief executive of New York’s Union Square Hospitality Group, operator of Union Square Café, Gramercy Tavern, Eleven Madison Park, Tabla, The Modern, Blue Smoke and Shake Shack.
Meyer has either reduced corkage fees at his restaurants or completely eliminated them on specific days. At Union Square Café, the fee was reduced from $25 to $10 per bottle; The Modern waived its fee on Sunday nights; and at Tabla, the fee on the first two bottles have been waived, but the third costs $25.
“The two biggest reasons people opt not to go out to a restaurant they love are because maybe they can’t afford it and because they might not feel right telling people they went to that restaurant,” Meyer said. “What I like about BYO is it not only makes it more affordable to come to my restaurant, but it also allows guests to bring part of their homes [with them]. If they feel like they are going home when they come to my restaurant, that’s a key variable in people’s decisions [about whether to dine out there or not].”
Meyer added, however, that even though consumers are spending less of their discretionary income, sales at his restaurants remain healthy.
“One thing I know for sure is that even with the recession, our check averages remain very, very steady,” he said. “I’m not someone who believes [people] are ordering less when they eat out. I do believe they are eating out less. Our cover counts are somewhat soft early in the evening. But I don’t believe that someone who is going to Gramercy Tavern is going to say, ‘Let’s get a bottle of Beaujolais,’ when they used to enjoy a bottle of Burgundy.”
Wioletta Zywina, owner of DaVinci, an 84-seat, fine-dining Italian restaurant in Boston, notes that her BYO policy has helped grow her customer base.
“By allowing our guests to do this, the relationship we have created has brought us even more guests,” she said. “There is that feeling that they are coming to their own house, and they feel very welcome. It hasn’t really affected alcohol sales a lot, because even though they bring a few bottles with them, they buy a few, too.”
Zywina charges customers a $25 corkage fee. She puts DaVinci’s annual sales between $1.2 million and $1.3 million, and said her food-to-alcohol-sales ratio is 60 percent to 40 percent. About 65 percent of her customers represent repeat business, she said, adding that she believes her BYO wine policy has been lucrative.
“If I have to be honest with you, we’re bringing in more business now than we did last year,” she said. “We’re anticipating sales of $1.5 million this year.”
Kevin Quinn, general manager of Apricots Restaurant & Pub in Farmington, Conn., said that offering a BYO wine program is helping keep sales somewhat steady during the financial crisis. The 200-seat fine-dining restaurant, which features a wine list of 220 varietals that range in price from $22 to $950 a bottle, started offering a BYO program in January that featured a $25 corkage fee. The fee has since been reduced to $10.
“I’d say it hasn’t hurt our business, because usually people feel that if they bring their own wine they can invest their money on other things in the restaurant,” he said. “We had just had a gentleman come in with a Chateau Latour, and he ended up ordering a full, three-course dinner. And these days, three-course dinners don’t happen all the time.”
He added: “These are tough times for a lot of people. The market is changing, and for us to remain competitive, we’ve had to change with that market. We’re in a period where everyone has to make adjustments to keep people coming through the doors. What you’re seeing is we’re all trying to find ways that make [good business] sense for our restaurants. We are trying to be sensitive to what our customers are asking for.”
Quinn, who said Apricots’ food-to-alcohol-sales ratio is 65 percent to 35 percent, added that he does not expect the economy to turn around for at least 12 to 18 months. Therefore, the restaurant is doing everything it must to succeed—even if that means cutting into its own wine sales.
“Everyone wants to be able to sell his or her own products first,” he said. “They’d like to make margins on those things themselves. Some restaurants mark up their wines three and four times; we don’t.
“But you know, volume solves a lot of problems,” he continued. “If that goes, you’ve got a lot of bills that don’t get paid.”
Meyer agrees that volume makes up for lower margins.
“Presumably, there is a bit less momentary profit for the restaurant and potentially less income for the staff of the restaurant,” he said. “But we’ve seen that when the restaurant has a very positive attitude about guests bringing in their own wines rather than fighting them over it, they tip very generously.
“Though we may be foregoing today dollars, it is in hopes of breeding more tomorrow dollars.”