Wine Program Management Flashcards
What are the core responsibilities of a wine program manager?
Curating and pricing a profitable wine list, maintaining inventory, adhering to legal requirements, supervising vendor relationships, training staff, and ensuring excellent guest service.
Why must a restaurant’s wine program be profitable?
No business can survive without sustained profitability. A profitable wine program helps cover labor, overhead, inventory costs, glassware, and other operational expenses.
Define markup in wine pricing.
Markup is the percentage increase between cost and selling price. For instance, a 3× markup on a $10 bottle sold at $30 yields a 200% markup (not 300%).
How is cost of goods sold (COGS) calculated?
COGS = (Starting Inventory Value + Cost of Purchases) – Ending Inventory Value. It reflects the true cost of items sold, factoring in waste, breakage, errors, etc.
What is burdened COGS?
It includes direct COGS plus other relevant costs like labor, glassware, storage, and preservation systems, giving a fuller picture of profitability.
What is gross profit, and how is profit margin determined?
Gross profit is the revenue minus the cost of a sale. Profit margin (%) = (Gross Profit / Total Revenue) × 100. It measures how much of the sale price is profit, accounting for COGS.
Why do restaurants typically have high profit margins on wine?
Wine must cover overhead costs like glassware, washing/polishing, breakage, labor, and inventory. Margins are high to offset these expenses and other business risks.
What is the average cost percentage for wine in US restaurants?
On average, wine cost is about 36% of wine sales. Many programs aim for ~33% or lower to cover losses and maintain profitability.
Compare margin vs. gross profit with an example.
A $10 cost → $30 sale yields a 66.6% margin ($20 gross profit). A $30 cost → $70 sale yields a 57% margin but $40 gross profit. The second has a lower margin but higher gross profit.
Which documents help track wine program profitability?
1) Profit and Loss (P&L) statement for overall profitability over time, 2) Balance sheet for a snapshot of financial position, 3) General ledger for every transaction in a category.
What are “control states” in wine law?
US states where the government runs the wholesale or retail sale of alcohol. Producers must sell to the state, and retailers buy from the state. Some states have government-run stores.
Explain blue laws or dry counties.
Some US locales restrict or ban alcohol sales on Sundays or entirely (dry counties). These zones often have unique or extra steps to allow alcohol service.
Why is a liquor license crucial, and what are some challenges?
Restaurants/bars need a license to legally sell alcohol. Licensing requirements differ by location, class of alcohol, and can be costly and time-consuming to navigate.
What are tied-house laws designed to prevent?
They forbid producers/distributors from exerting undue influence on retailers (like owning them or offering illegal incentives). This stops monopoly-like relationships.
Define dram shop laws.
They regulate alcohol service responsibilities. Examples include rules forbidding service to intoxicated persons or restricting after-hours sales; violating them can risk fines or loss of license.
What is the three-tier system in US alcohol sales?
Post-Prohibition structure requiring producers to sell to distributors, who then sell to retailers (stores, bars/restaurants), each tier adding costs and margins.
What does FOB price mean in wine importing?
“Free on board” cost excludes shipping from the departure port. The importer pays for transport from that point. Often used interchangeably with ex-cellar for domestic wines.
How can shipping conditions affect wine quality?
Dry transport isn’t temperature-controlled, risking heat damage. Refrigerated containers cost more but protect wine from temperature extremes, essential for long hauls.
Why are strong supplier relationships important?
Reliable vendors with the right portfolios, good service, consistent supply, and helpful account managers streamline inventory, reduce issues, and support a profitable program.
What are best practices for vendor appointments and tastings?
Schedule them (preferably outside rush hours), be prepared, know your program’s goals, keep an open mind, and follow up promptly with feedback or orders.
Why must businesses abide by 30-day terms in many states?
Mandated by tied-house laws or ABC regulations. Vendors cannot legally extend terms beyond 30 days; missing payments stops deliveries.
How can a buyer manage purchasing costs effectively?
Buy from multiple suppliers, look for volume discounts, negotiate broken-case fees, track close-outs, and focus on wines that sell quickly and offer strong margins.
Why is verifying deliveries on arrival important?
It ensures the right products and correct vintage are received, with no damaged or substituted bottles. Mistakes should be caught immediately for returns or replacements.
What does variance in inventory indicate?
Differences between theoretical stock and actual physical inventory. Causes can include theft, over-pouring, unrecorded comps, or inventory miscounts.
What are POS systems, and why are they useful?
They’re point-of-sale software/hardware that manage orders, track sales, integrate with inventory, and generate reports. They streamline transactions and reduce errors.
Why does staff training matter for a wine program?
Trained employees reduce errors, boost sales, improve guest experience, and handle legal responsibilities responsibly. Knowledgeable staff are more confident and satisfied.
How can a restaurant maintain wine freshness by the glass?
Focus on high-turnover wines, use preservation systems, watch shelf life, monitor pour size, and store open bottles properly to minimize oxidation and waste.
How does glassware choice impact a program?
High-end stemware can elevate guest experience but is fragile and costly. Simpler glasses may suit casual spots. The choice should align with the menu, concept, and budget.
What are effective ways to reduce employee theft of wine?
Set zero-tolerance policy, track every pour, watch comps, keep well-organized inventory, train staff on ring-ins. Also monitor any unusual variance or missing stock.
What is a common approach to set wine list prices?
Balance well-known crowd-pleasers for consistent sales with some unique offerings. Consider both profit margin (%) and gross profit ($). Align with budget and guest needs.
Why might a restaurant set lower markups on expensive wines?
Reducing markup encourages more sales of pricier bottles, which generates a higher total gross profit, benefiting both the guest (better value) and the business (larger net gain).
Explain corkage and how restaurants can handle it.
Guests bring their own wine for a fee. It accommodates special bottles and loyal guests. Restaurants may limit the number of bottles or waive fees under certain conditions.
How might a wine bar differ from a standard restaurant wine program?
Wine bars rely on beverage sales for profit, generally have less extensive food. Guests often want faster service, more by-the-glass options, and occasional flights or classes.
What’s the advantage of digital wine lists?
They can auto-update pricing and stock, saving on printing costs, and provide detailed search features. However, they’re more expensive, require maintenance, and may reduce guest-server interaction.
When is a pairing menu sensible, and what must be considered?
It pairs multiple wines with courses, boosting wine education and sales. Carefully manage cost, waste, and usage. Wineries or vendors might help sponsor or discount certain wines.
Why track “velocity” in a wine program?
High-velocity wines sell quickly and maintain consistent cash flow, reduce spoilage risk, and help meet budget targets. Balancing these with slower, higher-margin items is key.
What are some staff training methods?
Shadowing, role-playing, guided activities, short daily pre-service sessions, and occasional external classes or winery visits. Reinforcement of policies and knowledge is ongoing.
How can a restaurant handle large, iconic wines that don’t sell quickly?
They can elevate the wine list’s prestige, but tie up capital and cellar space. Maintain a balanced approach—just a few trophy bottles to keep overhead manageable.
Why is operational redundancy in staff roles important?
If one key employee is unavailable, a trained backup ensures the program continues without issues—crucial for management, inventory, or sommelier roles.
What is channel pricing in distribution?
Different prices for different buyer channels (on-premise vs. off-premise). E.g., special by-the-glass discount for restaurants that doesn’t apply to retail stores.
Why is dryness or oversweetness an issue in “dry transport” shipping?
Dry transport isn’t temperature-controlled. Excessive heat can compromise wine quality, risking damage, and sweet or high-acid wines might be more stable but still unsafe if overheated.
How might wine auctions or private collections help a restaurant’s list?
They can add rare or older vintages for depth. However, the buyer must handle legal constraints carefully (state laws vary about acquiring cellars or private collections).
What is the difference between a P&L and a balance sheet?
A P&L tracks income/expenses (e.g., monthly, quarterly) for overall profit/loss. A balance sheet shows assets, liabilities, and equity at a snapshot in time—helpful for immediate decisions.
