Segment Spotlight, September 2009; Vino as a Value Proposition

Although wine bars typically attract an upscale demographic, these operations are being positioned as a less costly option for consumers.

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During their travels throughout the U.S., wine lovers Diane Gross and her husband Khalid Pitts realized that their hometown of Washington, D.C., was one of the last big cities that didn't include a proliferation of wine bars.

When the couple opened Cork Wine Bar in the capital city a year ago, the restaurant was among a select few of its kind. That is no longer the case.

"Many wine bars popped up since we arrived on the scene, and new operations are still opening because the wine category is exploding," Gross says.

Unlike beer or spirit consumers who are more likely to trade down during a recession, wine connoisseurs tend to stay loyal to their drink, regardless of the price.

Total wine occasions were up 19 percent in the first quarter of 2009, according to Technomic, a Chicago-based research firm. During this same period, wine's share of total drinks increased 14 percent.

When looking at the alcohol segment as a whole, wine is the drink most associated with food. Approximately 90 percent of red wine occasions and 86 percent of white-wine occasions take place with food, compared with close to two-thirds of beer occasions, Technomic reports.

Though this restaurant concept is romantic and enticing for wine lovers, it has its challenges.

"Those looking into the wine-bar segment need to realize that, like any other business, it's about selling units. It comes down to a math equation," says Jerry Lasco, owner of The Tasting Room, which has three Houston locations, and Max's Wine Dive, a growing chain with sites in Houston and in Austin, Texas. "If the math doesn't make sense, you're dealing with red ink instead of black."

When The Tasting Room opened in 2003, there was only one other wine bar in the city. Now Lasco estimates that there are 25 to 30 operations that could be classified as wine bars.

"The concept has exploded throughout the country, with fancier versions of traditional wine-bar concepts being created," Lasco says.

This growth has spurred a number of trends. More attention is being placed on restaurant designs and wine displays. Wine flights, which provide patrons with a selection of small tastings, have become commonplace. There also is increased emphasis on wine and food pairings.

At San Francisco's Bar Bambino, menu items are developed to enhance the wine experience and wines are selected to enhance food flavor, says Christopher Losa, owner and wine director. "This is the core of what a wine bar is. These operations provide an educational platform for guests so that they can experience well-paired cuisine and wine," he says.

Affordability and Flexibility

In its basic form, a wine bar puts all of the emphasis on the vino, offering a small array of cheese and/or simple appetizers to clean the palate. Today, however, these operations are more akin to a full-service restaurant with an impressive wine list.

Wine bars also provide an option for people with hectic schedules. "What makes wine bars unique is their flexibility. People who have more time to spend can choose from a wide selection of wine and pair it with food. Others may just stop in for a quick glass of their favorite merlot," Gross says. "Guests can come in more often, since they are not obligated to purchase a full meal."

Cork Wine Bar's wine list centers on affordable options. Most are $6 per glass; the highest-priced selection is $15 a glass, and about 80 percent of the bottled wine is priced below $50. Keeping prices down has resulted in consistent 24-hour inventory turnover.

The wine-bar atmosphere differs from traditional bars in that it is more subdued. Wine bars are more suited for business meetings or conversation, since they typically are brighter and quieter than taverns.

"The reason we've been successful over the last two years is because people need to have spaces to go that aren't formal or expensive," says Sarah Munson, owner of The Local Vine, a Seattle wine bar. "With people's lifestyles today, they are out more often and need flexibility."

With 1,800 square feet and 45 seats, Bar Bambino is positioned as a full-service restaurant, rather than as a bar that serves wine.

"Wine bars need to become more full-service to survive and flourish in this segment," Losa says. "They also need to provide guests with a solid value in terms of the complete package. A simple wine bar with basic nibbles would have a difficult time competing."

And because many wine bars offer small portions and shared plates, similar to Spanish tapas restaurants, it is easier for customers to keep their tabs lower.

"A traditional meal at a white-tablecloth restaurant can take two hours or more. People appreciate being able to buy small portions because they don't have to make a large time or financial commitment," Lasco says. "This is part of the appeal."

The value aspect is especially important and enticing to consumers in today's economy, says Darren Carr, owner of boutique wine-bar Top Flr in Atlanta.

"Wine bars provide a good value. For people who know wine and are familiar with the selection, they can get a good deal," Carr says.

Working with non-brand labels has its advantages, he adds. "This allows us to constantly change our offerings, so we get new wine selections in each week."

Small but Mighty

Along with flexibility, wine bars offer a low barrier of entry to operators. Although most have full kitchens, they're not required. Operators can save money and labor by opening a wine bar with refrigeration and an electric pizza oven that can produce small appetizers.

"The goal of many wine-bar operators is to avoid the regulations full-service restaurants require," Lasco says. "They don't want to deal with the expense and issues of grease traps, hood ventilation systems and HVAC capacity."

At The Local Vine, the kitchen is just 10 percent of the total house space. The main cooking line is comprised of induction burners and a convection oven. "In the restaurant community, it is wrongly perceived that if you don't have a traditional full kitchen, you can't create outstanding food. From experience, we know that this is not the case," Munson says. "However, working with a smaller kitchen, we have to choose the foods that we are serving more carefully."

The Local Vine's small-plate menu includes Lamb Lollipops, White Truffle Popcorn and other handheld food that is both organic and locally sourced. The antipasto, charcuterie and fondue also are popular. There are 100 wines available by the glass and a reserve list of 300 more wines offered by the bottle.

Although also a full-service, 80-seat restaurant, Cork Wine Bar's kitchen covers just 300 square feet. The simple cooking line includes a fryer, grill, six-burner gas range and a double-stack convection oven. Top sellers are avocado bruschetta, sautéed mushrooms, duck confit and lemon-pepper-dusted calamari. Cheese plates also are popular.

The more than 200 wines, including 50 offered by the glass, are stored in an unrefrigerated basement wine cellar. "We also have a wine room that includes a refrigeration unit for our reserve wines. White wine has a dedicated refrigeration unit," Munson says.

In terms of supplies, glassware is a big consideration for wine bars. Today's consumers are more sophisticated than 10 years ago and expect the appropriate glasses for each type of wine. As stemware can be expensive to replace, Munson prefers simple styles that can house red, white, Burgundy and sparkling wine.

It is important to note that, because wine glasses are not stackable, extra storage space is necessary.

Like many wine bars, Bar Bambino's 300-square-foot kitchen creates a lot with a little. The back of the house includes a prep and cold line that runs down one length of kitchen, with four-drawer and two-door refrigeration units and a two-door freezer. The hot line is a grill, a 12-burner range (how many 12-burner ranges?) with an oven underneath, a pasta station and two panini grills. Walk-ins are located outside.

This winter, the two-and-a-half-year-old operation will shut down for a couple of weeks to improve its back-of-house layout.

"We rapidly evolved into a full-service restaurant with fine dining, so our kitchen needs to be brought up to the next level. This will allow us to better position ourselves in this highly competitive environment," Losa says.

Bar Bambino's extensive menu now includes a wide selection of antipasti, soup, salads, panini, bruschetta, house-made pasta and more.

Its wine list includes 1,000 bottles, which are stored in an on-site, custom-made closet and at an off-site storage facility. There are 180 bottles available at any given time, with 40 wines offered by the glass.

"Our menu is seasonally driven, and the wine selection is chosen based on the cuisine. As a result, our offerings are constantly changing," Losa says.

One of the biggest challenges in offering lesser-known wine varieties is educating customers. "Because our wine list is Italian, there is a strong educational component to what we do," Losa says. Consequently, great effort is given to familiarizing Bar Bambino's service team with the wines so that they can pass this knowledge on to customers.

At Top Flr, a rededication to the menu has resulted in the addition of Chef Shane Devreux. The 80-seat restaurant's 150-square-foot kitchen houses three double-sided prep stations, a 12-burner gas range, grill, pizza oven and separate 5- by 6-foot refrigerated wine storage area for up to 200 bottles.

In addition to its popular tuna tartar appetizer, duck confit pizza and pasta, there are 40 wines offered.

"Our setup is unique for a wine bar, since we have a bar downstairs and a full-service restaurant upstairs. Our small dishes easily translate to people eating in the bar," Carr says.

The Tasting Room and Max's Wine Dive also have moved away from the traditional wine-bar concept. "When we first opened The Tasting Room back in 2003, we started off with just cheese. ... We have grown our food capacity at all of our locations. Our largest site has a 1,500-square-foot kitchen where we put together wine dinners for up to 100 people," Lasco says.

This location includes multiple convection ovens, a stacked pizza oven, fryer, grill, sauté area and walk-in refrigeration. Max's Wine Dive's full kitchen has an eight-burner range, flat iron, quad fryers and double convection ovens. Popular dishes at Max's Wine Dive include pizzas, salad and cheese plates.

With traditional wine bars, there's a limit on the size, scope and revenue, and on the time people will stay. "The less food we have, the quicker our turns are," Lasco says. "That is not a good or bad thing, but it's the difference between a $20 check average and a $70 check average."

Two of The Tasting Room's locations have full kitchens; one location offers five-course meals, another has a more limited menu of appetizers, and the third offers just cheese plates, nuts, olives and other snacks.

Max's Wine Dive, a full-service restaurant, is expanding. "Our newer concept is focusing more on substantial pours and the full food experience, as opposed to wine flights and small pours," Lasco says.

Technological Benefits

One of the biggest challenges faced by the wine-bar segment is turning inventory. Wine by the glass produces half-empty bottles, which can add up to costly spoilage and waste.

Keeping temperatures consistent also is important in ensuring wine quality.

The country's growing interest in wine has resulted in new technology that seals and holds opened bottles at proper temperatures. "Wine bars were less successful five years ago because they were financially challenged due to wine preservation issues," Munson says. "Today we can offer a more robust wine selection."

The Local Vine uses an Italian system to preserve its wine and help reduce spoilage. In addition, a sophisticated point-of-sale system manages the extensive inventory. "We had to develop a way to work with this POS system, which was challenging but necessary to manage pour levels, inventory, costs, etc.," Munson says.

The Tasting Room and Max's Wine Dive use a wine dispensing system that premeasures for by-the-glass service. With self-serve units, customers use their credit card to purchase 2-, 4- or 6-ounce pours from the machine.

A unique gas system ensures that wine is stored properly and increases its shelf life to a couple of months versus two days. This also gives customers the opportunity to try multiple wines.

Critics of the new self-serve technology say it takes the social experience out of the equation, an important part of wine tasting. "People enjoy talking to knowledgeable staff about wine and receiving recommendations," Lasco says.

"People have a thirst for knowledge and a willingness to experiment," Carr says. "Our job is to expose them to wines that they may have not experienced before."

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