How to Sell Off Your Wine Cellar
In times like these, cash is king, so your prized wine cellar that was originally curated to pair with your menu or gain accolades is most likely your restaurant’s largest (and I apologize for the pun) liquid asset right now. Sure, if left untouched, there would be the potential for appreciation and an opportunity to make higher profits down the line, but sadly, fixed costs take priority right now, and holding off only adds to what is probably feeling like insurmountable debt.
First, make sure you can sell your wine without creating legal or contractual problems for yourself. It’s beneficial to double-check that you didn’t sign any contracts for highly allocated producers; contracts such as these are set up to guarantee and prevent that certain rare wines are only sold at specific restaurants and at typical restaurant markups. Additionally, make sure that your state is allowing on-premise liquor licenses to act, during these times, as retailers.
The next step is to figure out appropriate pricing. Start by adjusting the prices of your list to fall in line with retail pricing. This is fairly simple: multiple your cost by 1.4 to 1.7. Around a 1.5 times markup is completely fair, but pricing lower might make your selection more competitive, whereas going slightly higher might help you cover inevitable costs from delivery or processing fees. Before moving on from this step, it’s also important to verify the price of the competition via sources such as Wine Market Journal or Wine Searcher, as some of your older wines might have gained value over time.
Once your costs are set, you’re ready to make your selections available for purchase. This can be handled in few different ways. The first option is merely adjusting your existing wine list under a menu tab on your website. This can be done with a PDF attachment or completed using a bar inventory software system. In this scenario you’re handling the sales internally, employing your staff to receive orders via email or phone, and setting up your own pickup and/or delivery system. Your wine director or sommelier is the ideal person to handle this option, as they are most familiar with the wines and can make recommendations over the phone or via email. Also, by handling the sales yourself, you eliminate the high fees (upwards of 30 percent) that come with using some third-party food/beverage delivery apps. Unfortunately, with this option, you will have to drive the business yourself, so getting creative is key! Social media is a perfect way to spread the word to devotees of your restaurant and past guests. A daily bottle highlight, a recommended pairing with one of your chef’s recipes, or a virtual tasting are all great ways to get people excited about the wines you have to sell.
Also, don’t be afraid to do a little work. You’d be surprised by how effective it can be to reach out to your regulars and let them know their favorite wine by the glass or that bottle they opened to celebrate their last anniversary is now available for purchase. If sales are sluggish with this method or you simply don’t have the resources or large enough audience to make it work on your own, signing up for a takeout service that delivers alcohol would be your next move.
If direct-to-consumer and takeout service options aren’t generating the outcome you expected to achieve, or the process is simply moving too slowly, another option is to contact an auction house. Last month, the iconic Del Posto in New York City had its cellar auctioned off via Hart Davis Hart Wine Co. in Chicago. The roughly 3,500 lots were sold for a grand total of $5.7 million. Selling through auction can seem daunting for those with little experience but it’s actually not too difficult. Each auction house has a team that’s dedicated to evaluating each bottle’s estimated worth and will provide that range ahead of time. Along with that, a reserve will be set, which is the absolute lowest price a bottle will be allowed to be sold. Both the reserve and the upfront appraisal are tools you can use to determine if this the right path. They also have huge contact lists and use their own marketing to spread the word among potential buyers. If you need payment quickly, some auction houses even give the option to buy the cellar outright prior to the actual auction.
On the flip side, auction houses do charge fees, are really only interested in specific quality levels, and can require a bit of time to work everything out. If one doesn’t work out, there are literally hundreds of options to explore, from simple-to-use wine auction apps like Winebid, to the famous, more-established houses of Sotheby’s and Zachy’s
No matter the route of sale you go, if you’ve poured significant time, money, and passion into building your wine program, selling it off can definitely hurt. Remember that the goal is to get through these crazy and uncertain times so that hopefully, one day soon, we can all celebrate the end of this intense period of adversity together.
Ryan Bailey, a Sonoma County transplant, started his career while in high school at The General’s Daughter. While in college he fine-tuned his skills as a sommelier at The Kitchen, in Sacramento. Following his time at CIA-Greystone, Ryan pursued certifications in wine, beer, and sake. In 2013, Ryan joined the team at NoMad in New York City, and quickly rose to the rank of Head Sommelier. He now leads the Los Angeles wine team, curating NoMad’s wine and beer program. In addition to working the floor, in partnership with the design firm Klein Agency, Ryan founded Portae—a company focusing on customizable service-related smallwares and more.