France-Soir restaurant, South Yarra. Picture supplied. For re-use contact Robyn Carter (x2936) at Age Good Food Guide
"We don't believe in putting a wine on a wine list because we think nobody knows it and we'll be able to make more money out of it": Sommelier Pierre Stock, France-Soir restaurant, Melbourne. Photo: Supplied

Restaurateurs and sommeliers have hit back against speculation that restaurants will turn to their wine lists to stay profitable by hiking up margins and using lesser-known wines to disguise this.

In a story on the future of dining, industry consultant Tony Eldred predicted mark-ups of 250 per cent could happen sometime soon.

Eldred says “a radical deterioration in the profit margin of food” has forced restaurants to look to other areas to make money.

Sydney provedore Barry McDonald at his Walsh Bay Fratelli Fresh outlet.SMH THE (SYDNEY) MAGAZINE Picture by DAMIAN BENNETTSMAG100930
"There's a lot to be said for volume": Sydney restaurateur Barry McDonald, Fratelli Fresh. Photo: Damian Bennett

“Traditionally, until about five years ago, they would have put a 120 per cent margin on [a bottle of wine] and, after taking their costs out, they would have netted maybe 40 per cent.”

Substantially higher running costs combined with intense competition mean today's restauranteur needs to double that margin to make the same profit, he says. This is where a carefully constructed wine list comes into play.

“Restaurants don't want to put wines that you would know on their list because you will have a fair idea what they cost. So what they're trying to do now is to use their experience in wine tasting and buying to identify those wines that are 'batting above their league', the really good quality wines being sold cheaply,” Eldred says.

MERCURY, ZEST, FOOD, Biota Dinings restaurant. Chef James Viles is one of the youngest chefs to receive a SMF Food Guide chefs hat. 18 Kangaloon Rd, Bowral. Wednesday 19th October 2011. Photo Melanie Russell/MRU Story Lisa Wachsmuth
"People are coming to a restaurant to experience something they can't get anywhere else": Chef James Viles, Biota Dining, Bowral. Photo: Melanie Russell

“These are wines you can put a high margin on without people perceiving poor value for money.”

But restaurateur Barry McDonald, owner of award-winning restaurant Café Sopra and providore Fratelli Fresh in Sydney, says the practice shows “no regard for the customer”.

“And if you have no regard for the customer you're going to have no customers in a very short period of time," he says.

"There's a lot to be said for volume and we've always worked on the basis that volume gives you slightly lower margins but a better result.

“So rather than trying to hide behind unknown wines, you're more likely to do the opposite and show you're a value proposition for the customer.”

Sommelier Pierre Stock, of Melbourne's long-running restaurant France-Soir said customers had “enough experience and awareness of wine” to know what a bottle was worth.

“You don't take people for being silly … We put boutique wines on our list because we believe the winemaker has done a fantastic job and the wine is good … We don't believe in putting a wine on a wine list because we think nobody knows it and we'll be able to make more money out of it,” he says.

“I'm surprised with that [idea], because it wouldn't even cross our minds.”

But James Viles, owner and director of two-hat restaurant Biota Dining in Bowral, said some restaurants are already looking for lesser-known labels and applying a higher mark-up.

“I don't see a problem with it because people are coming to a restaurant to experience something they can't get anywhere else,” he says.

“To have a garage wine that only had a release of 30 or 40 bottles for instance, I think there should be a premium on that.”

However, he added that “balance is crucial” because restaurants can't afford to “just appeal to one kind of market”.

“The engineering of the wine list is crucial, especially in the current market. Some weeks we only sell the expensive wines, then you go through a slump and everyone's buying in the lower market. As my father says, it's harder to pick than a broken nose.”

If not wines, cocktails and spirits could be where the real money lies, according to industry consultant Carlos Swinton-Lee, owner of Bar & Restaurant Consultants.

“What I think we'll see is expanded cocktail lists," he says. "Larger restaurants all have bars attached to them now with cocktail lists and quality tequilas and rums and bourbons. The margins are much better in cocktails than they are in wines.”