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 Thus, at the outdated “standard” bottle markup of 3x, markup is not 300% but 200%.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.
Recently, I had to do sake service. What is the correct glassware to use if sake cups aren’t available? The options were: red wine glass, rocks glass, or champagne flute
Excellent read! The only comments that I can offer to buyers is that one should be active and not simply reactive with your distribution partners. You need to tell them clearly what you need, you are the driver in these relationships or you may end up a pawn. You need to communicate general quantity considerations for purchase, pricing brackets etc. You should know their book better than they do. Also, don't be too rigid or be a diva with rep appointments. Yes do keep things orderly but don't be too dogmatic or you will miss out on the last minute or limited quantity deals; make yourself available. I've always told my reps that it's their job to pitch and I'll choose when to swing.
Hi Mark, thanks very much for your comment! We'll be sure to keep this in mind for the future.
Very helpful and informative. Is it possible to reach out to Canadian MS' and do a piece on laws here, as they are vastly different? Just a thought
This is immensely helpful. literature on this subject is very hard to come by. Thanks.