October 2007

Letter from the Editor- Corkage as Punishment

By: Anthony Dias Blue
Most restaurateurs count on wine sales to make a substantial contribution to their bottom line. They conclude that they are entitled to a big profit on wine. If they don’t get that profit, they feel cheated. To compensate for this perceived loss of revenue, they add a painful penalty charge to the bill of those with the audacity to bring their own. It is corkage as punishment.

This attitude is understandable. After all, you have spent good money to create a well-considered wine list. You offer a nicely rounded selection that complements your menu. So when some unappreciative and arrogant customer has the nerve to bring his or her own wine to your restaurant, sock it to them. Right? But let’s re-examine the logic and the economics here; does the punitive corkage charge make business sense?

The initial reaction is that these presumptuous diners are trying to lower their bills by finessing the cost of wine. Don’t let them get away with this chiseling. But let’s look at the situation from the customer’s viewpoint:

I have some really nice wines laid down. Some of them are ready to drink and I don’t want to drink them with Lean Cuisine or the usual tuna casserole. I want to consume the great wine with great food. So I have chosen your restaurant and its excellent fare to pair with my exceptional wine. Maybe you should be flattered rather than hostile and insulted.

Recently I went to a restaurant carrying two excellent wines from my cellar. I was told by the server that the corkage charge was $30. I thought the price was pretty high, but I was willing to accept my punishment. Then the waiter informed me that I could open only one of my wines. The next bottle would have to come from the wine list. So I ordered a $30 wine from the list.

This would seem like a win for the restaurateur, but let’s examine the economics. If I am permitted to drink both of my wines, the net profit is $60. By forbidding me my second bottle, the restaurant has created a hostile atmosphere and reduced its profit to around $48 (the $30 wine off the list probably cost the restaurant $12).

The Houston’s chain, one of the best run and most profitable of all restaurant groups, lets its customers bring wine and, without comment, opens it, serves it with a smile and doesn’t add any corkage charge to the bill. This smart operator has discovered that the customer that brings wine usually makes up for it by ordering the most expensive and sophisticated dishes and more of them.

And if restaurateurs subscribe to the logic of corkage as punishment, then they should be consistent and add a penalty to the check of everyone who orders a Coke or an iced tea. After all, these patrons, too, are avoiding the wine list and its high profit potential.

Maybe it’s time to re-examine your corkage policy. I would wager that by lowering or eliminating your corkage charge, you might actually increase your profit. Try it.

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