April 10 2006
There is an ongoing debate going on: folks are forming non for profits to fight wine mark-ups in restaurants and the corkage debate, particulary in California, is a hot button issue for wine lover’s who are asked to pay sometimes steep fees to bring their wines to a restaurant.
The San Francisco Chronicle had a very long look at the issue. And, it’s complex,and regional. The issues in California are likely not mirrored elsewhere—and definitely not in the Midwest, save, for perhaps, Chicago.
When Craig Stoll decided to prohibit diners from bringing their own wines into his Pizzeria Delfina, he didn’t think he was doing anything newsworthy.
Was he ever wrong.
Just ask the angry pack of wine-toting customers huddled on the sidewalk outside Stoll’s San Francisco pizzeria on a Friday night after they were told they’d have to leave their bottles at the door.
Sure, it’s just a pizza place, and with a very reasonably priced wine list. Yet the backlash that ensued when Pizzeria Delfina opened in July 2005 with its don’t-bring-your-own-bottle policy shows that the ability to take one’s own wine into Bay Area restaurants has become as commonplace — and accepted— as sharing plates. It also spotlighted the dilemma restaurateurs face when they create their BYOB policies — and few Bay Area restaurants don’t allow the practice.
Restaurants charge what’s called a "corkage" fee to open and serve the wines brought in by patrons, but corkage doesn’t make up for lost sales from the restaurants’ wine lists, or the resources it takes to pour customers’ wines. BYOB also shows a disregard, restaurateurs say, for the wine program they have carefully crafted to match their cuisine and atmosphere.
The Owner, Craig Stoll, continues:
"I just don’t understand what the whole fuss is about," Stoll says. "We’re working really hard at putting our wine program together. It’s our package, our vision. The program is part of the restaurant, like a painting on the wall or the food on your plate. I don’t understand why people feel so entitled to bring their own.
"What if you collected fine tablecloths from all over the world, and you don’t ever cook at home so you wanted to bring one in to eat off of? It’s ridiculous."
Um, Craig? Can I help you with something—especially in creating analogies that resonant and make sense? Tablecloths? Craig, you don’t charge me a 2.5X mark-up specifically on your table linen, do you?
On the whole, I’m going to leave this subject alone, lest I get into a 1000 word screed about how happy customers and positive word of mouth creates more customers.
Fortunately, this chapter excerpt and a mini-case study from a guy that sells bikes in competition against Wal-Mart in Connecticut illustrates, he who gets it, gets the customers. A good scan for anybody—and a good lesson for a pizzaria to take from a bike shop—both independent retailers and old vestiges of Main Street America.
In addition, Zane calculated what any customer was worth to him over a buying lifetime. That’s why when a customer came into Zane’s store with a six-year-old pump that was completely worn out from use, Zane happily gave him a brand new pump. Let’s look at his economic analysis for this pump. This six-year-old, worn-out pump was a top-of-the-line item originally costing $60. So you might jump to the conclusion that Zane was out $60. However, the pump’s cost to Zane was only about $30. Moreover, in this case, because of his relationship with the manufacturer, he was credited with the $30, so giving the customer a new pump actually cost Zane nothing. Even if the pump had cost Zane $30, replacing it for free still made economic sense. The next two times this customer came in to his store, he bought $200 in accessories. Zane netted about $100. Moreover, when the customer decided to buy his next bicycle, where was he likely to go? So, Zane made even more. And, what about word-of-mouth advertising to other prospects? That’s probably worth a lot more.
Wine? Bikes? Anything that is bought and sold in retail—it’s all about the customer.
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