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Articles, May, 2002

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How restaurants can make everyone happy--or unhappy

 On my BYOB page, confined to Philadelphia-area restaurants,[1] I relate the story of a restaurant that made a senseless choice regarding BYO policy. It went something like this:

Several years ago, I went into a French bistro-type restaurant in New York City. We had with us a horizontal of 1985 second growth Bordeaux and foolishly assumed we could work out a "bring our own" deal, even though the place had a license. The food was good, the prices reasonable, but the place had always been annoying because of their horrible wine list, not that we want to buy off of overpriced lists anyway.  The best bottles on this restaurant's list invariably were Beaujolais-Villages. Yet, the only answer we could get on corkage privileges was "no," "no" and "no" again. We had offered them the equivalent of their entire profit on one of their nicest bottles of wine as a per bottle corkage fee. Plus, they would get to keep their own wine to sell to someone else.  Still, "no." So, we left. Apparently, this made no one happy, but it happened anyway.

Things are changing, but slowly. More restaurants than ever seem to allow reasonable BYO, meaning the privilege of “bringing,” with a  reasonable corkage fee.  But we have not reached nirvana yet. For one thing, in some states it is literally illegal to bring wine into a licensed restaurant. New Mexico, for instance. This inane policy is often parroted in states where there is no such illegality, but the restauranteur will claim it is illegal. I run into this a lot in Pennsylvania, where it is NOT illegal, but some claim it is to deter BYOB.

Ignoring state prohibitions, though, the real issue becomes, does it make economic sense for a restaurant to allow BYO with corkage? My thesis is that this can be a good decision for both parties, customer and restaurant.  Yet, many places act in incomprehensible fashions.  They act as if they have been insulted if you request corkage. They may be good at the cooking, but they are not so good at doing the math. Judging from the failure rate of restaurants, it should be no surprise that the people who are great at entertainment are not necessarily so great at balancing the books.

It is a rare restaurant that should sensibly deny BYO with reasonable corkage.  Let’s define “reasonable” first of all.   Admittedly, “reasonable,” depends on circumstances.  I would generally say in nice places (not the ultra-premium tourist destinations)  $15 or so is a maximum standard; it would be kinder and gentler to be at $7.50 to $10.00.  Really upscale “destination” places might justify a bit more. But I see little justification for an $85 charge, such as that imposed by Jean-Georges in New York, recently, or, usually, even the $40 or $45 we occasionally see in really upscale places,  certainly not unless they can answer “yes,” to these questions:

Can they look you in the eye and say

(a) the table would've been taken by someone else, i.e., they’re full all the time;
(b) the someone else would almost certainly have been a wine drinker;
(c) the wine drinker would likely have ordered something really expensive, not a bottom of the line wine that they make $10 to $20 on.

In most places, the answers to these questions makes a kinder, gentler corkage policy easy to devise. In some places, the answer may differ depending on the weekday.  If they can say “yes,” on Friday and Saturday, are these also the answers on Monday and Tuesday?  Very few places, I think, will be able to keep saying yes. A fair restauranteur trying to satisfy all sides might ban BYO on busy weekends, grant it the rest of the week. It does depend on each person’s circumstances. In fact, the policy may even change depending on who the customer is, as odd as that sounds. No restauranteur wants to adopt a BYO policy that lets every oblivious customer with Sutter Home white zin beat them out of $5. So, maybe until they get to know you they quote a high corkage price--but when they see that you bring real wine AND you wouldn't likely be coming if you can't get BYO privileges at a reasonable price, maybe they'll "forget" a few bottles. The permutations of a corkage policy relating to the circumstances of each individual restaurant are endless. The point is: there's usually one that works.

I think a lot of places see vast but in fact imaginary profits disappearing when they grant corkage rights. In fact, I think that those profits were never "real" in the first place. You mention BYO and paying $15 tops and they panic.  Does every restaurant really make a killing off of wine sales at every table every night? Right. Let me know when you stop laughing.

If you called them and said, "We'll take a table for four, and by the way, none of us drinks. We'll just have coffee," they wouldn't even think of turning you away, would they? If you called and said, "Hi, table for four please. By the way, we're kinda broke, but we would like some wine to be chosen and decanted beforehand. What's your cheapest wine? Great. Order us two bottles of that at $30 each." They wouldn't even think of turning you away, would they, even knowing that their wine profits were limited to $30 total, would they?

But if you want that table for four and you offer to guarantee them $60 in corkage fees, the same place will get huffy, as if you're going to bankrupt them and ruin their business. Hello? Does this make any sense?

To be sure, in the world and the country, there are a few destination restaurants that are always full, it seems. And some of them are located in Napa Valley, for instance, where it is a pretty good bet the typical consumer will be into wine, and they will have an unusually good chance of ordering expensive wine. The French Laundry might be one such example.  But it's a rare restaurant that's constantly full, with access to well heeled expense account types crazed about wine, plus a big, deep, pricey list that they sell out constantly.  (I wonder how the French Laundry does in February on a Monday night, by the way.)  The rest can find a reasonable BYO solution that makes as much sense for them as well as us.  The question is, are they really losing money if they grant your table corkage fees? A lot of them think they are; I think for the vast majority of  them, granting that individual circumstances might differ, they aren’t, especially if the wine table consists of a typical group, i.e., lots of bottles.

Keep in mind, too, that we are simply discussing straight up income generation from corkage versus a regular table now.  That doesn’t even begin to fully explore the economic issues.  Corkage isn’t just a matter of a couple coming in once a year at a table for two.  Making wine folks happy often means accommodating groups of bon vivants who order full course meals, buy upscale entrees, tip well (keeping staff happy on off nights) and are regular diners at nice places.  These are people who generate cash flow, especially on weaker nights of the week. I know some places that do not charge me any corkage at all for that reason. It’s a plus to have us there, a plus to keep us coming back, especially if we’re doing it on a Monday, a Tuesday, for instance.  True, too, we’re pretty convivial. Some restauranteurs are into wine and just like us. They know they will always get tastes of rare, interesting wines. We also cooperate in bringing our own stemware, pouring our own wine. We’re reasonable.

Additionally, of course, anything charged to us for BYO  is pure profit. If we come even close to matching the income that might be generated for our table if we had not taken it, the restaurant is way ahead because they still get to keep their bottles to sell to someone else. There is no cost of purchase, no effort to purchase, no problem with storage, sending back bad bottles, and so on.

So, it seems to me, there are precious few reasons why a customer and a restaurant should not be able to come to a place where both can be happy.  Yet, often, as in my opening story, the restauranteur’s reaction is visceral and incomprehensible.

In any business, restaurants included, it is the business' quest to offer a product someone will buy that creates a transaction for the business. They are there to make the customer happy, which is going to be the secret to their turning a profit. If there is no common meeting of the minds, there's no sale. Which means the business will ultimately be unhappy too, not just the customer. When the customer asks for corkage rights, this is simply a way of saying "Do you want my business," in one translation. If the answer is "no," that's fine if it makes some sort of sense. It's a free country.  But a customer has reason to expect that he won't get a lot of irrational attitude that is pointless from someone in a service industry, simply because he tried to work out some way the parties might both be happy--instead of both unhappy. It's a free country from that end, too. If the restaurant is projecting a lot of attitude and it comes down to them saying "My way or the highway," my reaction is: "Hey, you're asking ME for money, not the other way around. I'll spend it someplace else, where the person makes an effort to give me what I want, not what they want to give me."  For another thing, it is pointless to argue. The service just becomes begrudging and ungracious. There are too many other choices to make.

Restaurants have an endless ability to rationalize corkage issues. Again, keep in mind, that when all facts are considered, I think it is unquestionably a good economic decision except in rare circumstances  for them, too.  Some of them seem incapable of simply doing the math.  Others indulge in extravagant rationalizations.  For example, they have a $50 corkage fee because they are trying to deter cheapskates who might otherwise go to the liquor store and bring in a bottle of Sutter Home White Zin. But that's easily handled.  Even a $10 or so corkage charge eliminates a lot of incentive to bring cheap stuff in. I've seen some places put limits like "minimum 10 years old."  It depends on what they have on their own list, and how much they gouge, I mean charge, for it, to come to the right mix of answers, but there is an answer for most places that can make sense for everyone.  The reality is that most people who want to BYO in a reasonably nice place are going to be wine lovers with cellars. They are looking to drink their well cellared wines at an affordable cost, not bring in cheap junk.

Why do the restaurants believe all these vast profits are disappearing? There is a fundamental disconnect between how the restaurant views this--as a major imposition--and how the customer views it---as a minor request for service. This is because the restaurant only sees what is in front of its eyes. The cash register goes "k'ching, k'ching" whenever they sell some pricey bottle of wine. What they don't see:

  • the people who stay home and don't patronize their restaurant
  • the empty tables might have been filled but stayed empty
  • that people into wine tend to order full course meals, not grab a plate of pasta and leave like a lot of other folks
  • that tables that ordered little or no wine didn't generate much in liquor profits--and a BYO wine group might have actually paid more in corkage fees.

        These are things I personally see just about every week. When they explain their profits and losses to me, one line item that is always missing is: "Squires group, didn't come in, generated no cash flow, lost $300." This is not a theory---it's fact. 

        A word about restaurant wine pricing might be in order, by the way.  So, some places will sell you a $40 bottle at $80. And that’s enough profit. Then, they’ll sell you a $250 bottle at $500. Why isn’t the $250 bottle at $290? Yes, I understand there is a higher cost of money. There is a justification for a small percentage disparity. But an extra $210?  Where did this concept come from? Is it any wonder consumers want to bring in wine? Admittedly, I would want to bring in wine anyway. My wine group has a list that matches most any restaurant, and ours is always going to be cheaper.  With the quantity and quality that we consume, it is simply not possible to pay restaurant markups on a regular basis.  For a wine lover, remember, this is regular activity. Dining out is a way of life, not a once-a-year special event. Corkage and BYO makes so much sense all around….

    It does seem to me that some of this has gotten through. Despite some astonishing and incomprehensible stories, more and more places try to meet you half way and work out something everyone can live with. I've put theory into practice and convinced some restaurants to liberalize their policies. Not one has ever regressed or reported unhappiness. For the remaining dinosaurs…..well, you just need to remember that you have plenty of choices these days. Patronize people who are friendly and reasonable.  

    [1] On the Bulletin Board, there is also a Forum which contains national and to some extent international, BYO picks by members.


    Copyright Mark Squires, © 2002 all rights reserved.