As Restaurant Staffing Evolves, Wineries Reassess Their On-Premise Priorities

The union between wineries and restaurants might have been a marriage of convenience in the beginning, but for decades it functioned roughly the way that both parties wanted. For wineries, restaurants were important points of discovery and could confer status and legitimacy onto new projects or new regions, as well as provide an additional channel for sales. While restaurants could generally count on more favorable pricing than their off-premise brethren and a captive audience of drinkers who seemingly never balked at the substantial mark-ups charged by those establishments.

Yet as wine’s place in American drinking culture is under siege, and as the restaurant industry as a whole struggles to deal with the wholesale changes forced upon it by shifting economic conditions and the fallout of the Covid-19 pandemic, this once stable relationship looks increasingly like it’s on the rocks. Perhaps the clearest evidence is consumer reaction to wine pricing in restaurants; wine lovers got used to the cost of wine at retail and now look askance at a standard restaurant mark-up. “Instead of enjoying a bottle at a restaurant, people were drinking at home, purchasing the wine through liquor stores, or online with certain apps that sorted based on pictures and prices,” says Sergio Jardim, wine director at Delmonico’s in New York City. “Fast- forward to today and seeing the same bottle of wine with a markup at a restaurant is discouraging guests from ordering wines and giving them a reason not to trust the sommelier.”

A Shifting Relationship

“The symbiotic relationship between wineries and restaurants is very obviously shifting,” says Barbara Gross, operations director at Oregon’s Cooper Mountain Vineyards. “It seems to me that anyone approaching the on-premise channel needs to be very thoughtful and intentional about how their winery can fit into a restaurant program, as opposed to the old methodology of targeting a restaurant program to get in front of consumers.” With smaller wine lists on restaurant menus these days, these selections and decisions — for both wineries and restaurants — are understandably more critical than ever. “If the economics don’t fit for either party, then the symbiotic relationship wasn’t meant to be,” Gross says.

One fundamentally awkward truth has always existed under the surface of this seemingly happy relationship: Restaurants were often the least profitable places for a winery to sell its wines. Sales to restaurants brought back thinner margins than even other wholesale channels, and paled in comparison to direct-to-consumer sales; with the exception of a few choice by-the-glass placements, restaurants rarely delivered massive volume either. For a lot of wineries the only rationale they had for paying as much attention to the on-premise trade was that promise of discovery — that having their wine showcased alongside delicious food and eagerly sold by knowledgeable sommeliers and servers would turn that first-time drinker into a more devoted customer. But that notion is waning, too. “The old idea that if you get a glass-pour placement at a busy restaurant then people would seek your winery out, well, I see that a lot less than I used to,” says Morgan Lee, winemaker at Washington’s Covington Cellars and Two Vintners. It’s a common refrain, driven in part by the changing landscape of wine professionals in restaurants.

Unfortunately, the kind of dedicated and curated wine programs of yesteryear are less common these days, mostly because there aren’t the same resources to make them happen. “After 2020, so many experienced wine people are no longer on the floor, and in many cases they haven’t been replaced,” says Kerry Shiels, winemaker at Washington’s Cote Bonneville. “It’s a big part of the change in the restaurant industry, that there are way fewer dedicated and experienced wine people outside of fine dining.”

“Post-pandemic, everything is more expensive. It’s not so much [that we’re] trying to compensate for ‘challenging years’ as much as it is simply a new reality.”

For many restaurants, these personnel were an integral part of connecting guests to wines. “A lot of people left the industry after and didn’t go back, and a lot of people who were super passionate chose a different path,” Lee adds. “They’re not out there buying wine for all these accounts.” That brain drain not only means that wine buying in many restaurants is delegated to a manager with many other tasks, but that many wineries and distributors have little idea who even to approach with new wines at those accounts.

There’s also the reality that wine programs themselves have shrunk and simplified significantly since 2020. “We made the decision to reduce our wine lists by 50 percent in a large sale to the public,” says Ian Mendelsohn, beverage director for Atlanta-based Fifth Group Restaurants. Beyond that, Mendelsohn chose to modify selections to classic regions with benchmark producers. “I hated to see some of that wine go, but the last two years have shown us that we made the correct decisions,” he says.

Restaurants that have reopened since 2020 often had to do so on shoestring budgets that precluded building a large by-the-bottle list. That means that producers and their distribution partners are often vying for fewer spots on the wine list, or at a disadvantage when competing with larger producers and distributors that can afford to sell at a loss to squeeze out competition.

Increased costs on all fronts don’t help, either. Jasmine Hirsch, winemaker and general manager at California’s Hirsch Vineyards, notes that it’s gotten so expensive to operate that even some nicer restaurants are forgoing sommeliers or wine experts, which ultimately means that they have to forgo wines that are more difficult to sell. “Post-pandemic, everything is more expensive,” says Joel Lee Kulp, owner of The Richardson in Brooklyn, N.Y. “It’s not so much [that we’re] trying to compensate for ‘challenging years’ as much as it is simply a new reality.” For Kulp, when menu prices need to go up, the drink menu is an easy place to start, and especially the wines by the glass, where the offerings are being changed more frequently. “You can only add $1 to the price of fries, because the fries are still the same. You have a lot more freedom with choosing new wines. Higher-priced glass pours get higher check averages.” Kulp explains that price increases sometimes happen because the restaurant is genuinely offering a more expensive and ideally better glass of wine, but admits that in many cases, “[a restaurant] may simply be pushing the pricing envelope as a way to see how far they can go once they have seen how far the neighboring restaurant goes.”

As a result, there’s a noticeable shift on drinks menus. “Many restaurateurs are simply not willing to invest in wine programs, and instead are focused on cocktails and spirits,” says Kristin Olszewski, founder and CEO at Nomadica Wine. There’s no doubt that wine’s share of sales in restaurants is shrinking. “In the last year and a half, we have seen an almost 10 percent increase … in the sales of spirits and cocktails,” Mendelsohn says.

“Restaurants are still a really important way for us to make sure that we’re not the only people talking about our wines. We think it’s worth subsidizing our wine so we can offer a good by-the-glass price through our distributors.”

Price is surely a factor, but so are two inescapable realities for wine: It is no longer seen as the only option for pairing with food in many settings, and many of the wines that command critical acclaim and lofty scores are not just expensive, but ill-suited as a pairing with many of the most prevalent culinary trends of the last decade.

Reassessing Priorities

Wineries, too, have brought about some of these changes. When on-premise sales evaporated in March 2020, wineries were forced to pivot almost overnight. Some were able to increase their presence in off-premise outlets ranging from grocery stores to big-box retailers, while others turned to their existing coterie of wine club members, hosting online classes and events initially while expanding their direct-to-consumer efforts and offerings. Now that normalcy is restored for the most part, that added workload can be especially taxing for smaller producers, diverting attention and resources from other opportunities. “Between my wine club, social media, wholesale, and my tasting room, how you reach people is more scattered, and my bandwidth for building and maintaining relationships with restaurants has shrunk,” says Shiels.

To be fair, the prior model is still working for some wineries. “Restaurants are still a really important way for us to make sure that we’re not the only people talking about our wines,” says Jason Haas, general manager of California’s Tablas Creek Vineyard. “We think it’s worth subsidizing our wine so we can offer a good by-the-glass price through our distributors.” Haas admits that profit isn’t really the point of selling his wine wholesale, but remains committed to the notion that those kinds of “in the wild” encounters generate new visitors and wine club members.

Great restaurant wine programs still exist throughout the country, but it’s clear that wine is in many ways losing ground outside those strongholds. An increasing number of restaurants view wine as just another part of their beverage offerings, not the centerpiece of their program. Even if many winemakers recognize that restaurants might simply not be a productive outlet for their wines, none of them are happy about it. They recognize that for the wine industry to remain vibrant, it needs to continue to be a crucial part of the American dining experience, but for now it’s unclear if it will be so in the vast majority of American restaurants.

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