Posted on | May 1, 2012
Written by | Robert Haynes-Peterson
With shifting liquor laws, the stubborn recession, customers that range from clueless to cocky, and a seemingly endless onslaught of SKUs, it’s a wonder anyone even reaches for a liquor license, let alone stocks the shelves. But stock the shelves you must if you are in the wine and spirits business, whether that means aisles of metal racks, a cozy boutique framed by redwood bins, or even a restaurant juggling both a loaded bar and wine cellar.
How do you maximize the customer experience, when shelf space, storage space and cash flow are at a premium and competition is relentless? It may seem obvious, but all the discerning taste in the world doesn’t mean anything if it doesn’t get the power bill paid. “Fixed costs can get expensive real fast,” says Ernesto Vega of New York’s Table Wine shop in Jackson Heights, Queens. “You may not realize the sheer amount of volume you have to move.”
Tracking, maintaining and updating your inventory efficiently not only ensures that your inventory pays for itself but also covers all expenses, including everything from software to the guy who swings by and washes windows for $5. Hoping to find additional useful advice, we picked the brains and spreadsheets of several on- and off-premise owners and managers. Here is what we learned:
Order Early, Order Often
Most inventory managers we spoke with order at least once a week, and some several times a week. While it’s significantly more work than ordering in bulk a couple of times a month, the strategy allows them to maintain a tighter on-site inventory, update it frequently as new deals arise, and build strong relationships with the sales reps. “I do spot checks on inventory one to two times a week, and order every week,” says Antoine Przekop, director of liquid operations for Tallulah Wine Bar and Bistro in Birmingham, Michigan, a Detroit suburb. “There’s always niche stuff, new vintages and new vineyards coming in on a regular basis.”
The natural goal for restaurants and retailers alike, is to avoid over- or under-ordering, which particularly in a small space can wreak havoc. Suddenly boxes are stacked in public walkthroughs, or you’re out of Yellowtail on Friday afternoon. “We monitor what sells and what doesn’t, and that affects how we buy,” says Manuel Mesta, beverage director and GM at Vertical Wine Bistro in Pasadena. “There are things we can go down to the last two bottles and feel comfortable. And then there’s the stuff you have to be up a couple of cases, because you’re going to be moving that product daily.”
To a store, every off-premise owner we spoke with would love more facings. Facings of course represent—and present—the breadth (as opposed to depth) of your inventory. If customers can see the label, they’re more likely to buy it. “We have well over 5,000 SKUs in the store,” says Eric Goldstein of Manhattan’s Park Avenue Liquor Shop. “And I wish could offer more facings.” With scores of flavored vodkas and large winemakers offering a dozen bottlings, shelf space is at an all-time premium. The situation is made even tougher with the increasing number of unusual bottle designs (an issue also impacting the well and back bar at on-premise establishments, and a concern for some bartenders with regards to the newly introduced retro-vintage packaging for brands like Plymouth Gin and Plymouth Navy Strength).
Facing positions hinge heavily on the very basic question of how much real estate you devote to selling space vs. storage. The bigger your back room, the less you have up front. Goldstein reminds: “You’ve got to have it to sell it.” His family’s 2,200-sq.-ft. store dedicates about twice the on-site space to storage as it does to retail, with additional off-site storage for rare vintages and corporate accounts. With shelves rising 15 feet to the ceiling, Goldstein notes, “We’ve utilized every nook and cranny.” While this approach maximizes facings, it makes restocking a perpetual ritual. When one wall of the shop was shored up recently, the staff thought they’d been given a minor miracle when construction serendipitously created an extra four inches of shelf depth.
Lines in the Sand
“We’re approached every single day by a wine rep or spirits brand ambassador, and we only have so much space,” says Goldstein. Product selection is to a large extent an exercise of drawing lines in the sand. Consciously or not, the chaotic parade of SKUs in wine, beer and spirits has a focusing effect: Selecting and organizing from the full, shifting universe of products forces business owners to define what their store represents. Are you a bigger in domestic wines or imports? How many nationally known brands do you want to carry, and do you want to emphasize or downplay them?
One spirits merchant admitted that they might fare better financially in their neighborhood carrying minis and mainstream, lower-priced labels, “but that’s not what we set out to accomplish.” For Queens-based Vega, price points are as important as quality to develop the store’s personality: “We try and keep the wine between $10 and $20, with a few outliers. It’s for the neighborhood as well as for the economic times.”
“We try not to carry anything too mainstream,” says David Delaney of Boston-based Niche Hospitality, which runs several on-premise locations, including bar/restaurant complex The Citizen. “Not because it’s poor product, but because if I put Ketel One in a drink, that’s the only thing most guests will order.” Carrying smaller labels helps allow the staff to guide customers around the cocktail menu and answer questions, according to Delaney.
“Even though there are 200 beers on our list, it could be thousands,” notes Christian Albertson, the beverage director for San Francisco’s beer-centric Monk’s Kettle and the soon-to-open beer-pairing restaurant The Abbot’s Cellar. “So you have to make sure that everything that’s on there has a purpose, and that the entire staff knows about it.”
Inevitably, an element of compromise often comes into play. “My father, Michael, always says, ‘There’s stuff we have to have, because it’s what we want, and stuff we should have, because it’s what people want,’” explains Park Avenue’s Eric Goldstein. So even though Park Avenue specializes in single malts, and you can secure a $30,000 bottle of Cognac or a 2008 Screaming Eagle, you can also pick up a SkinnyGirl Pre-Mixed Margarita or the latest Absolut City release.
“We have a 400-plus bottle list, also available for retail purchase,” says Manuel Mesta, beverage director and GM at Vertical Wine Bistro in Pasadena. “Every month we go through and see what sells. Unfortunately, my favorites are not necessarily the most popular. So we have the crowd pleasers as well as the stuff that’s for a more developed palate.”
Technology: On Your Side
We live in a wondrous age, technologically speaking. A handful of people can do the jobs it took several to do a decade ago, and often much faster. One huge development in recent years: POS systems that double as inventory management tools and work in sync with your website. “I was always a Mac guy, and like many things you won’t find a lot of [Mac-based] POS software,” says Vega. “After asking around, we found LightSpeed out of Canada. It’s a pretty robust system, perhaps more than what I need.”
Another boon, albeit lower on the tech hierarchy: laser printers. The simple power to adjust a wine list (or menu) has quietly put beverage directors in greater control than ever. They can take on a single case of a new wine on a trial basis; if it sells quickly, the hot new wine can come off the list pronto, then return (or be replaced) as soon as the next delivery arrives. Similarly, slow sellers can be discounted. And for those restaurants with long lists, a single-page insert laser-printed for the front of a binder can make the whole list fresher and friendlier.
“We’ve got a large copier/printer, so we can do nice, big work,” says Albertson. “It’s also got the hole punch in there, so the new pages go right in the binder.” The flexibility of in-house printing offers a chance to promote the inventory (both new products and products that might be sitting too long) in creative ways: themed seasonal expressions, like rosés, specialty or branded cocktails (also a good way to score distributor deals), wine-pairing dinners and so on.
Of course wine, beer and spirits aren’t pipe fittings. Some beverage managers (more frequently boutiques and short-list restaurants) still prefer eyeballs, pen and pencil to Excel spreadsheets. “I personally know every bottle we have,” says Vertical Wine Bistro’s Mesta. “It’s like art. Some are more precious than others.”
Get to Know the Distributors
Building a strong relationship with your distributors, and getting to know their books, increases the opportunity for them to contact you first when bargains arise. “Of about 50 wine distributors on the list, I work with about 10 regularly,” says Mesta. “They want to sell you everything in the book, of course. I pick the stuff that’s award-winning from each vendor. And I have my experts: I’ve got my Italian experts, my French experts and so on. ”
“The great thing about having long-standing relationships with the distributors, is that I’m not just dealing with a sales rep, but a brand manager or VP of sales. That way I have a bigger scope of all the products available,” says Tallulah’s Przekop.
Another benefit to building good relationships with your wholesale sales reps is that the distributor can actually become part of your inventory strategy, not simply that person who comes by to collect money.
“Obviously, we want to help our customers be successful in selling our wines,” says Dolma Maria Halstead of Mistica Wines, an importer/distributor based in Seattle and specializing in Argentine wines. In addition to coordinating in-store promotions via shelf talkers and sampling events, Halstead says the sales reps’ assistance can be truly hands-on. “We’ve found that many of our clients appreciate when the reps come in to check inventory levels themselves, advise on re-orders and even help stock the shelves by putting away the wines and help put price tags on them.”
Your distributor also acts as a sort of external storage system, of course, since their entire book is essentially your potential stock. “Washington state is a COD state,” says Halstead. “The bonus is we get paid right away, but the downside is we end up delivering much smaller orders, since a small business might only be able to afford one or two cases a week. Restaurants that have at least one wine by the glass are our best accounts, because they reliably order one or two cases weekly or every two weeks.”
In some cases, notably Port and Bordeaux, a distributor can even act like a deep wine cellar. A birth-year Vintage Port or trophy bottle of claret for a customer may be only one phone call and delivery away. The same holds for large-format bottles. It’s a rare store that has the room for double magnums, jeroboams, balthazars and so forth. But such items are rarely impulse buys, so there is no real need to stock them. Meanwhile, making customers aware of the availability of such rare items can be as simple as a nicely laser-printed sign.
Staff Training Moves Cases
“Educating our staff is vital,” says Niche Hospitality’s Delaney. “It was challenging at first, but then they realized we are doing this for a reason and not just bashing the mainstream brands.” In addition to creating a positive environment for the customer (and who hasn’t been frustrated by waitstaff some time or another), Delaney says the extreme training pays dividends in employee pride and loyalty, with very little turnover. It also helps him move a wider variety of product beyond vodka.
Rigorous staff training also helps move the entire inventory, “rather than just what’s on the top of their minds because they tasted it last week,” says Albertson. “You want them to understand everything that’s on the list so they can guide the customer to a beer they want, when they don’t know what they want.”