Dr Vino's wine blog

Thomas Keller’s luxury restaurant at the Time Warner Center, Per Se, will impose a mandatory gratuity of 20% on all checks. Jon at amuse-bouche was on this story early, then the NYTimes, and now the story has gotten national exposure with CNN and USA Today picking up on it.

Although I am coming to the discussion late, I asked Mark Ashley, our Senior Tipping Correspondent, if American waitstaff really respond to the power of the tip:

My feelings on this are mixed. (Putting social scientist hat on.) I don’t think that mandatory tips — or even the size of the set tip percentage — have a direct correlation to service quality. Other variables are important, including the perceived status of the restaurant, the quality of the food ,the price paid, the service tradition of the region, the behavior of the customer, and others, I’m sure. I would also expect difference service levels at different types of restaurants. At top fine dining locations, in Europe or in the US, I would expect top service, whether or not tips are included. And generally, this has been the case. After all, if the service stunk, they’d be out of business. The market would take care of that… But at “family style” places, the service imperative would be weaker, so the voluntary tip might help in improving service. So by this token, a Per Se or its ilk could do a fixed service charge and the service shouldn’t perceptively change. In a Bennigan’s-esque place, or a downscale family restaurant in Europe, it might.

(Taking social scientist hat off, putting consumer hat on.) As a diner, I like choice. I like options on the menu, I like the option of giving a 17% tip or a 20% tip or whatever. Having a 20% tip be mandated for me offends me a little. It especially offends me when the justification for the change is the desire to pay the kitchen staff more. They want to take money out of the pockets of waitstaff and put it into the kitchen staff, by imposing mandatory tips? Why not just pay the kitchen staff better to begin with ? Thomas Keller must be doing fairly well, why not sacrifice some of his net margins for higher wages?

In this instance, since an overt reason for doing this is to reduce waitstaff pay, we MIGHT actually see a reduction in service… This is ham-fisted work by Keller.

Fred Franzia, maker of “Two Buck Chuck” (aka Charles Shaw), the wine that sells for $1.99 a bottle at Trader Joe’s in California, now wants restaurants to sell another of his wines for $10. story

It is a welcome step from a big industry player to bring restaurant wine prices down! (Now, the quality just has to stay up)

DRINK! Patrons drinking up at BYOBs By Tyler Colman Special to the Tribune November 12, 2003

see my interactive map of Chicago BYOB restaurants!

BYOB restaurants are not just for students any more. Nor are they limited to the corner ethnic restaurant. Many Chicago restaurants are choosing "bring your own bottle" as a niche–a situation that suits the owners and diners alike.

Conventional wisdom in the restaurant industry holds that although food may be how a restaurant becomes known, the money is made in the liquor. But some restaurants in town, many of them chef-owned or with a strong focus on fine food, defy this conventional wisdom.

Why sacrifice the money that a liquor license provides? For Norman Six, chef-owner of Lovitt, a Bucktown restaurant that serves contemporary American cuisine, the answer is easy. "It makes us distinctive. People seek out BYOB.”

Beyond standing out in the crowded dining scene, many restaurants in this category are BYOB for three main reasons. First, getting a liquor license–and liquor–can be an expensive hassle. Second, the current economy has made diners more frugal. And third, diners have become much more knowledgeable about wine.

To apply for a liquor license from the city, the restaurant must already be in operation, which explains why many restaurants are BYOB when they first open. This allows city inspectors to assure that the license is not being used to simply run a bar, for example. The license itself costs a flat fee of $2,000 a year: A 30-seat restaurant pays the same fee as a 300-seat restaurant. The costs of training the staff, stemware and storing an inventory of wine can be incentives to remain BYOB.

Such is the case for Chinoiserie, an Asian fusion restaurant in Wilmette, which expanded three years ago to 90 seats. "We never got around to it," says owner Janice Lee about applying for a liquor license. "When we enlarged, we thought that we would at least add wine and beer. But no matter how much space you have it’s never enough."

A trend toward frugality has made diners tighten their purse strings. Rather than cutting back on the frequency of eating out, diners can simply cut back on the bill. A good way to do that is to bring your own (most BYOB places do not charge corkage fees, or charge a small amount).

Jody Andre has just started her third BYOB restaurant, Speakeasy Supper Club, which includes a 1930s bar (without alcohol) and a menu ranging from tapas-style dishes to ostrich Wellington. The economy made staying with the BYOB model an easy choice. Because two restaurants she opened before have been successful as BYOBs, (Tomboy, which she sold recently, and The Room), Andre feels that "the formula works. I couldn’t imagine anything else."

There are limits to the BYOB model, however. For the owner, the margins are thinner.

Tougher to make a profit

"It takes a lot more labor to sell $1,000 worth of food than it does $1,000 worth of drinks," says Daniel Bocik, chef-owner of A Tavola, which serves regional Italian cuisine in Ukrainian Village. His 8-year-old restaurant was BYOB for the first year while awaiting a license.

Rents also matter. Linda Raydl, a new co-owner of Tomboy, cites increasing rents in Andersonville as the main factor in making the transition to a liquor license. And for Andre’s Speakeasy, the low-cost neighborhood on the edge of Rogers Park is essential to success.

"I open my restaurants in more obscure neighborhoods," Andre says. "This keeps it about the food and BYOB keeps it affordable for the residents."

The final factor pushing consumers toward more BYOBs is a growing wine knowledge–these diners do not want to be confined to a wine list.

Many consumers have amassed personal wine collections and like to tap into them. Wendy Gilbert of Savoy Truffle in Logan Square says that her customers "are always bringing in wines that they have personally brought back from Napa" to accompany her $35 prix-fixe menu for six courses.

Diners have also grown more savvy in the cost of wine in restaurants. Robert M. Parker, the international wine critic, has called restaurant wine markups, which can exceed 300 percent, a "legitimized mugging of the consumer."

Wine club members rejoice

Indeed, many wine enthusiasts agree and are voting with their pocketbooks. Joseph Wu, head of the local wine dining group Grape Lakes Wine Appreciation Guild, says, "I can’t tell you the last time I bought a bottle of wine in a restaurant. There are so many great places that are BYOB or have modest corkage fees."

Wu’s is one of many wine groups in the Chicago area that frequent BYOB restaurants. "When you get the right pairing of food and wine, they each complement and elevate each other," says Wu. So group members bring a dozen or more bottles to a monthly themed dinner.

Two dozen wine groups dine at Andre’s restaurants every month. She explains that for the diner, "it’s like having a dinner party without having to cook." And Six says he has had "the best wines of my life" in his BYOB restaurant, thanks to generous diners who share a glass of rare fine wines with him.

The future looks bright for the BYOB strategy. When A Tavola’s Bocik opens a new restaurant, it will be BYOB.

"I’m a chef, I cook food," Bocik says. "People can save money and bring exactly what they want to drink. There’s a whole culture of BYOBs in Chicago that can be tapped into."

Wine is a cash cow for restaurants. It is not uncommon for a restaurant to sell a bottle of wine for over a 300% mark-up on the retail price of the same bottle (and the restaurant often doesn’t even pay the retail price). Wine by the glass is a particularly insulting activity since the consumer quite often covers the entire cost of the bottle by purchasing just one glass (while the restaurant may be able to pour 5 – 7 more glasses from that bottle). The situation amounts to a “legitimized mugging of the consumer” according to wine critic Robert Parker.

To be fair, wine is capital intensive. Restaurants have to allocate storage space on the premises for wine and hopefully that storage area is temperature controlled. The expensive strategy for a restaurant’s wine cellar is to buy and hold a large inventory. The less expensive way is to have the local distributor make deliveries once or twice a week. However, this second strategy has its pitfalls in that the restaurateur loses control of the wine list to the distributor’s portfolio of wines. This is a leading cause of why restaurants with good food serve frustratingly bad wine.

Training the staff can be time-consuming and expensive but this is not always the case. When the restaurant has a sommelier, or wine steward, that person must have been trained. The most prestigious training for a sommelier is the Master Sommelier, a degree that is difficult to achieve and also rare (only 51 currently in the US). However, fewer and fewer restaurants—including even some top restaurants—are taking the time to have a sommelier and instead provide all wait-staff some wine education. Actually, wine producers visiting from California or local distributors are often the ones who undertake this education. Learning by doing seems to be in fashion. That’s a fine approach when it comes to wine but it is decidedly less expensive. The cost savings could be passed on to consumers.

What can you do about this situation? Well, not all that much really. One approach is simply not to buy wine in restaurants that have excessively high mark-ups. But because fine food and fine wine complement each other, this strategy may not be the most enjoyable. Many restaurants will let customers bring in their own wines and then charge a “corkage fee” ranging from $3-10 (sometimes even more). This can be a good way to get around the markups since a really good $30 bottle of wine from a wine shop could fetch over $70 in a restaurant. However, many restaurants recognize this as an end run and it is best to call first to confirm that it is accepted practice. Short of sending a blatantly offending restaurant a letter, voting with your feet (or your pocketbook) is an effective way to send a message.