Knowledge of wine earns sommeliers credentials and opportunities, yet what it takes to keep a position and advance is the ability to provide excellent service while running a profitable business. Successfully managing inventory, working with distributors, navigating legal issues, and training staff are essential—but often learned on the job. This guide explores these aspects of the industry, focusing on wine program management in restaurants.
No business can survive without sustained profitability—which requires more than simply selling wine above its purchase price.
The first term to understand is markup, or the percentage increase between the cost of goods and the selling price. For example, a 33% markup on a bottle that cost $100 results in a $133 selling price. Rather than specific percentages, however, the terms 2x (two times), 3x (three times), and so on are often used to define markup. The markup percentage is calculated by dividing the gross profit by the initial cost and multiplying by 100. Thus, at the outdated “standard” bottle markup of 3x, markup is not 300% but 200%.
Initial Cost: $10
Markup: 3x
Listed Price: $30
Gross Profit: $20
$20/$10 x 100 = 200% Markup
Cost of goods sold (COGS) is calculated by taking the starting inventory of a period, adding the purchases of that period, and subtracting the ending inventory. It represents the cost of bottles sold, incorporating factors such as waste, over-pours, breakage, spillage, complementary pours, and inventory errors to reveal true product cost. Because sales can fluctuate dramatically day-to-day, financial performance is evaluated based on longer periods of time, such as a month, quarter, or year.
"It is wise to build in buffer time when ordering. This relieves stress for both the buyer and the vendor and reduces the likelihood of out-of-stock issues."
I second that! More mistakes are made with orders on Thursday afternoon in the 15 minutes before cutoff than any other time during the week. Your vendors are frantically trying to key in orders and this may involve manually changing pricing for your BTG or Happy Hour program. Plus, if something you need is out of stock, there is no time to pivot to something else for the weekend. Also, the 5 minutes before cutoff is not the best time to ask which wine would fill X in your program for your next day order. As a sales representative, I work for my buyers and I'm happy to consult with them and research the best wines for their program, but last minute queries are a major source of anxiety!