Corkage Fees Flee at S.F. Restaurants

Today brings a bit of good news for San Francisco diners.  We’re gradually losing our reputation as a city of restaurants with excessive corkage fees.  Today’s article in the online version of the WSJ (Bay Area Edition) reports that more and more S.F. restaurants are waiving their corkage fees.

The reason is clear.  It’s the economy, stupid.  And as a wine merchant who might benefit from such a movement, you’d think this would be good news for me as it may be for you.

But will such waivers last beyond the current downturn?  Once we put this devastating period behind us and move on to economic recovery, will corkage fees remain waived?  I doubt it.  Here’s why…

Restaurants who have waived their corkage fee (usually $10 – $20) have done so in hope that more diners will choose them over they restaurant next door.  It’s a fish-eat-fish world out there in today’s competitive dining marketplace.

But here’s the challenge – a waived fee has to bring in ENOUGH additional customers to make economic sense.  First, there’s the basic loss in revenue – wines sold from the restaurant’s wine list provide a substantial margin – often about 300% of cost.  That’s higher than anything else on the menu except perhaps coffee or bottled water.

Then there’s the out-of-pocket costs.  Any increase in traffic will also have to offset broken glassware (assuming the patron doesn’t bring their own glassware is a pretty safe bet) which can cost a high-end restaurant $500 – $1000 per month.  That’s a lot of additional dinners!

It’s been a tough few years for many of us.  But I’m glad I’m not in the fine dining establishment.  Many of my favorites have gone under in recent months, and many more are hanging on by a hangnail.  I don’t begrudge them their corkage fee – it’s still a bargain relative to buying wine off the list!

So hey, it’s Monday night.  The first work night of the new year, for most of you.  Why not celebrate our hope for better things to come by enjoying a night out, complete with wine?

Dave the Wine Merchant