Chapter 16 — Key Takeaways

The one-page card. Wine is capital that ages on a shelf, priced by a ladder rather than a percentage, and sold by people who are not sommeliers.

The core claims

1. Wine is the only inventory in the building that behaves like a portfolio. Produce turns every two or three days, protein weekly, wine 11.4 times a year — and within that average, Bellwether's by-the-glass shelf turns 26.4 times (14 days) while its top shelf turns 2.7 times (135 days). Those two shelves sit four feet apart and are not the same kind of asset.

2. Cost-percentage pricing fails at both ends of a wine list, on the same page. A flat 3× on a \$8 bottle gives up margin nobody would have noticed; a flat 3× on an \$80 bottle gives up the entire sale. A bottle that never sells has no cost percentage — it has your money in it. Ladder the multiple down as cost rises and the gross-profit dollars up.

3. The last glass is either pure margin or pure waste. At a five-glass yield, glass one pays for the bottle. Selling four of five instead of five of five costs five points of pour cost on that bottle. Across a year, Bellwether's plan expects to pour out 180 bottles — \$2,376.

4. Wine's cost percentage is worse than the bar's and its economics are better. A \$14 glass yields \$11.20 of gross profit for the labor of pulling a cork; a \$14 cocktail yields \$11.48 for juicing, batching, shaking, straining, garnishing, and washing a tin. You bank dollars per minute of labor, not percentages.

5. The margin does not exist until somebody sells it. Most guests ordering wine are afraid of mispronouncing something, overspending, and being judged. All three are design problems. A server who puts a finger on the list and asks "something around here?" is worth more than any curatorial decision the buyer will ever make.

6. The top of the list is marketing inventory, not selling inventory. Its job is to make the middle read as reasonable. One bottle anchors as well as three and costs a third as much to own.

Bellwether's numbers — memorize the shape, not the digits

The key formulas

$$\text{BTG yield} = \frac{\text{bottle volume in oz}}{\text{pour size in oz}} \qquad \frac{25.4}{5} = 5 \text{ glasses}$$

$$\text{Menu price} = \text{wholesale bottle cost} \times \text{markup multiple}$$

$$\text{Carrying cost} = \text{bottle cost} \times \text{annual cost of capital} \times \frac{\text{days held}}{365}$$

$$\text{Turns} = \frac{\text{annual COGS}}{\text{inventory at cost}} \qquad \text{Days on shelf} = \frac{365}{\text{turns}}$$

The ladder, in four lines:

Round to the nearest whole dollar. Never to .99.

Markup → cost %: 2.0× = 50% · 2.5× = 40% · 2.8× = 35.7% · 3.0× = 33.3% · 3.2× = 31.3% · 3.5× = 28.6%

The key terms

Wine list architecture · by-the-glass (BTG) · BTG yield · bottle-price laddering · wine markup · wine cost percentage · the three-tier system · corkage · wine storage · sommelier certification levels

Rules of thumb worth carrying

• Pick a pour size that divides the bottle. 5 oz uses 25 of 25.4. 6 oz uses 24 and strands 1.4 — about 91 bottles a year at Bellwether's volume.
• Never buy more than 90 days of supply on the bottle list, or 30 days by the glass. If a discount only works at a quantity that breaks the rule, it is not a discount — the financing usually costs more than the savings.
• 90 days without a sale = on notice. 120 = off the list, or down to one bottle if it anchors.
• Cap the ceiling shelf at 10% of selections and 12% of inventory dollars.
• Date every bottle when you open it. Same discipline as the walk-in, same failure mode.
• Would you set this in front of table 12 without saying anything? If not, dump it.
• Decide the exit before you buy — pour it by the glass, feature it, teach with it, or return it. Ask about the return policy before the first order, not after the twelfth month.
• If a category's protective equipment costs more than the category is worth, you bought the wrong equipment or built the wrong list. Usually the second.
• Never correct a guest's pronunciation. Not gently. Not ever.
• Wine is alcohol. Roughly five standard drinks a bottle. ID, dram shop, over-service, and the refusal procedure all apply exactly as they do at the bar.

What you should be able to do Monday morning

Open your POS, run wine sales by SKU for the last ninety days, sort ascending by units, and put a number next to every selection: bottles on hand, bottles sold, days of cover, and dollars of capital. Then draw one line under everything with more than 120 days of cover, add up the dollars above the line, and decide — out loud, with your partner in the room — how much of that money you meant to have there.