It’s a hard time to run a beverage program. Costs are escalating due in part to an unhappy blend of tariffs, supply chain issues, and general inflation. The wholesale sector of the drinks industry is in a tremendous amount of flux following the collapse of Republic National Distributing Company (RNDC) over the last year, meaning that keeping steady supply of product is trickier than ever. Add to that concerns over labor costs, a public that keeps hearing that no one drinks any more, and oh yeah, a bewildering array of products and product categories that could easily overwhelm even the most seasoned professional.
Yet savvy and experienced buyers and beverage directors are continuing to find ways to navigate the push and pull of excellent hospitality and the realities of business. Strategies abound for dealing with these challenges: some rely on economies of scale, or the ability to store large quantities of product, while others are contingent on knowing your clientele and how to deliver the experience they crave, even when the bottle they want most is either unavailable or has skyrocketed in price.
When Prices Soar
It’s absolutely not news to anyone that the cost of basically everything in beverage alcohol has increased, often dramatically, over the last half-decade or so. “I cannot sell Premier Cru Burgundy for the same price we could five years ago,” laments Will Jones, wine director at The Hope Farm and Little Bird in Fairhope, Ala. “So for something approachable, I may sell a Hautes-Côtes de Beaune or Hautes-Côtes de Nuits, or this really beautiful Bourgogne Rouge or Bourgogne Blanc.”
For the guest who maybe dreamed of a wine from an iconic region but is now suffering from sticker shock, “I can give someone a northern Italian or an Austrian or a German wine with as much of a story as I would for a Grand Cru Burgundy,” explains Felipe de Assis Villela, beverage director at Bluepoint Hospitality Group in Easton, Md. “I could give you a Grand Cru German wine for under $200, or you can get a Grand Cru Burgundy for $1,800, which, I’m not gonna stop you from doing, but that’s not what everyone’s able to do.”
While those substitutes can still excite guests, no one is thrilled about paying more and more money for their drinks. That’s compounded by pushing margins or markups ever higher, either because their clientele can and will pay the higher price or in a desperate attempt to wring a bit more profit out of what may be the main profit center of the property. Yet when the price of a bottle of wine, say, has potentially already been bumped up by the producer, the importer, and the distributor, an aggressive restaurant markup of 200-300 percent can be absolutely punishing to guests. “I’m not so obsessed with a percentage mark. That’s a luxury I have in my position,” admits de Assis Villela. A mix of common sense and a desire to actually move certain wines to help him set prices as opposed to pushing prices as high as possible has resulted in a program that maybe doesn’t boast a gaudy profit margin but does serve both guest and restaurant. “I’m still making money, but the percentage may not look like what I had to do on Long Island, which, you know, apologies to all my guests back there,” he says.
Buying in Bulk
One of the more straightforward ways to be more profitable is to purchase in larger quantities. While different states and different distributors can have wildly different approaches to volume discounts, most of the time if you’re willing to buy a bunch of cases of whatever, you’ll get a much better price. It can also insulate against product shortages, but of course it also requires something that not every restaurant or bar can have: storage space. Being able to place product at multiple different outlets within the same property or even the same city can also make bulk buying more viable.
“Sometimes distributors will set up quantity discounts for us,” notes Amanda Reed, director of beverage at E3 Co. Restaurant Group in Seattle. “We’ve gotta buy five cases at a time or 10 cases at a time — that’s usually our limit for storage in [most of our] properties. But if we’re coming up on a really good deal and there is plenty of supply, I might just try to work something out where we commit to X amount, but we’re only gonna bring it in five cases at a time.”
Accepting the Limits
Part of the challenge is the tremendous upheaval in the wholesale category over the last couple of years. The complete collapse of RNDC from the second-largest beverage wholesaler to Chapter 11 bankruptcy in less than two years has played no small part, with tariffs contributing not just to higher costs but also more challenges getting products into the U.S. in the first place.
Time, too, is at a premium, especially in a landscape where beverage professionals are often expected to perform any number of additional administrative and managerial tasks, even when that’s not exactly what attracted them to the job in the first place.
“When you first become a buyer, you’re so excited to sit down with reps and get to be this figure of authority,” says Johannus Grevelink, beverage director for José Andrés Group. “The reality is that if you open up my inbox every day, I have 40 to 60 emails from people about their product and how it could be a great fit at José Andrés Group or at one of our outlets with the name spelled wrong. Sifting through all that — I don’t know anyone that could have the time to do that.”
Hidden Costs
It’s relatively easy to understand much of what drives up prices at restaurants and bars, but there are plenty of less-obvious costs as well. Maintaining consistent placements doesn’t just make life easier for the beverage director or allow for lower prices on the product itself, it cuts down on training and printing costs, too.
In an era of ever-increasing labor costs, gathering staff to taste and train on new products is expensive. But that investment — in time, money, and effort — can also help new products thrive, especially in light of the alternative. “If I place a new spirit, I can send an email to a GM who will forward it to the AGM, who can print the tech sheet for pre-shift and talk to the staff about it,” says Grevelink. “Realistically, now that information has come through the supplier to the buyer to the GM to the AGM to maybe like a floor manager who’s doing pre-shift on a Tuesday. My passion for that bottle is not gonna translate.” Regular staff education and training can help move product, of course, but paying that hourly wage across the entire service team has never been so pricey.
Menu changes can also come with significant costs. “We don’t print our menus in house, we outsource,” says Reed. “So I have to be really selective about what I choose to put in the cocktails; I confirm that the inventory and availability is gonna be there. Once I’ve designed my cocktails, there’s a lot of back and forth between me and my reps about supply, because I don’t want to have to change one ingredient in the middle of a season when nothing else on the menu needs to be changed.”
This, again, is where larger buys (where possible) can come in handy. A program that changes less frequently can get by with less staff education, fewer menu changes, and require less admin time from frequently-overworked beverage directors and other managers. Yet every such person interviewed for this piece bemoaned that they were not able to spend as much time on some of those aspects of the job — staff training and increasing their own product knowledge most of all.
Managing Relationships
Just as the relationship with the guest is crucial to a great restaurant experience, everyone I spoke to was emphatic that their relationships with producers and suppliers was key to their work, both in terms of quality and in terms of job satisfaction. Cultivating and nourishing them is an active and intentional choice. “When we first opened at the Hope Farm, I was unable to get the large majority of any allocations that I wanted because we didn’t have that history,” says Jones. “Now thankfully, we do. I love meeting new winemakers. I love maintaining our connections with the ones that we love.” For Jones, it’s about far more than just getting access to product or even having something new and exciting to offer to guests. “I’m here to create a relationship with the producer, to host them in town and open a beautiful bottle of wine when they’re here, and to continue to build that relationship.”
That kind of relationship also just makes the day-to-day operation of a restaurant smoother. “I’m trying to avoid constantly running out of stuff and having to find a new vendor to fill a placement,” says James Baugh, beverage director for TMC Hospitality. “We want to build a long-term partnership with someone who supports us and has available product for us. And sometimes there’s just days where you blow through some product and it’s nice to have someone you know to ask, ‘hey, can you drop me a couple of things?’”
The overwhelming sense from beverage directors right now is that their job involves a consistent fight to keep their heads above water, to make sure that their programs can still meet guest needs while being leaner, more cost-conscious, and more resistant to staff and product turnover than ever before. They’re still passionate and motivated, but they’re also feeling the pressure and struggling to deal with it.
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