Understanding Restaurant Corkage Fees: What Diners and Owners Need to Know

Have you ever been out for dinner with your own wine bottle for a special occasion, but met with a corkage fee at a restaurant? This charge, which is usually present on a restaurant's menu or communicated at the table, can catch some diners off guard.

Table of Contents

1. What Are Corkage Fees?
2. Why Do Restaurants Charge Corkage Fees?
3. How Do Corkage Fees Affect Diners?
4. How Do Corkage Fees Affect Restaurant Owners?
5. Best Practices for Setting Corkage Fees
6. The Feasibility of Corkage Fees: Pros and Cons for Restaurants
7. Using Restaurant Management Software For Corkage Fees
8. Conclusion
9. About Supy

For restaurant owners, this fee is a way of ensuring they don’t lose profit when they can’t sell their own wine, but still offering customers the flexibility to bring their own. But what exactly are corkage fees, and why do they exist?

Whether you're a diner trying to understand what you're paying for or a restaurant owner looking to implement or refine your corkage policy in accordance with corkage fee laws, this guide will explain it all.

1. What Are Corkage Fees?

At its core, a corkage fee is a charge that a restaurant imposes on customers who bring their own wine or alcohol. Rather than purchasing from the restaurant's selection, diners choose to bring their own drinks since restaurants often have a high markup on alcohol or spirits.

The corkage fee is meant to cover the cost of providing service for that bottle of expensive wine. This mainly includes the glassware, storage, and service required to present and pour the wine. It also is a part of menu engineering since most drinks are stocked based on the dishes they pair with and the likelihood of their selection.

But it's not just about the glasses. Corkage fees also compensate restaurants for the opportunity cost of not selling a bottle from their own inventory. After all, a bottle of wine bought by a customer is one less sale from the restaurant’s wine list. The corkage fee helps offset that lost revenue.

Although many restaurants allow you to bring your own wine, the corkage fee they charge for it can vary based on the establishment. High-end eateries sell an ambiance and high-class service, which is why corkage fees are usually higher over there. Casual dining spots can offer you little to no corkage fee at all.

On average, corkage fees range from $10 to $50 per bottle, depending on the type of restaurant, location, and the wine or beverage being brought in. The corking fee can also depend on their polices of how they serve alcohol and the general beverage costs.

2. Why Do Restaurants Charge Corkage Fees?

Now that we've defined corkage fees, the next question is: why do restaurants charge them just to serve wine? There are several reasons behind this practice, and understanding them can give both diners and restaurant owners better insights into how corkage fees work.

• Cost Recovery: A restaurant isn't just providing a place to eat—they’re offering a complete dining experience. When you bring your own bottle of wine, the restaurant still has to provide the necessary glasses, chill the bottle (if needed), and serve it properly. These additional tasks require time, effort, and resources, all of which come with a cost. The corkage fee helps offset this.
  
  
• Profit Margin Considerations: A big part of a restaurant’s profits comes from its ability to sell beverages, especially wine. Although there isn’t any comparison between the wine markup and corkage fees which is just a few dollars, this small charge helps ensure that the restaurant doesn’t miss out. It helps balance the loss of a wine sale and ensures that the restaurant’s bottom line isn’t heavily affected.
  
  
• Wine Selection Control: Restaurants spend a great deal of their time curating their wine lists and selecting the best drinks to go with their menu. By charging a corkage fee, restaurants can incentivize customers to choose their offerings rather than bringing their own bottles. It is the most effective way to ensure their wine selection is also given a chance when it comes to pairing drinks with the food or toasting for celebrations.
  
  
• Legal Regulations: In some areas, corkage fees may be partially influenced by local laws and regulations regarding alcohol service. In certain regions, laws might mandate that alcohol only be served or consumed if it’s purchased from the establishment. In these cases, the corkage fee is a way to stay compliant with regulations while still allowing customers to bring their own drinks.
  
  
• Market Demand and Competition: Corkage fees can also be seen as a response to market trends. In some cities or areas with a thriving wine culture, corkage fees have become the norm. Some restaurants may implement corkage fees simply because their competitors do, in order to stay in line with local practices. Most wine enthusiasts order wine at restaurants with valid liquor licenses and profitable alcohol sales. Licensed restaurants tend to have policies for BYOB practices to prevent overly intoxicated guests that interfere with the restaurant experience.
  
  

While corkage fees provide multiple benefits for restaurants, the practice is not universal, and not all establishments charge for outside alcohol. Whether or not a restaurant chooses to charge a corkage fee often depends on the type of dining experience they wish to create.

3. How Do Corkage Fees Affect Diners?

Now that we know why corkage fees exist, let’s take a look at how they affect diners—those who walk into a restaurant with a bottle of wine in hand, expecting to enjoy it with their meal.

For many diners, corkage fees are something they may not anticipate, especially if they’re used to a more casual dining environment where bringing in your own wine is common. Corkage fees can impact the dining experience in several ways:

• Cost Consideration: A corkage fee is an additional cost on top of the price of the meal. For customers who were hoping to save money by bringing in their own wine, this charge may feel like an unexpected extra expense. For instance, if a diner brought in a bottle of wine priced at $20 in a store but has to pay a $30 corkage fee, they might wonder whether it’s worth it to bring their own wine at all.
  
  
• Value Perception: Some diners may view corkage fees as unfair, especially when they perceive the charge as too high for the service provided. They might feel that a restaurant is taking advantage of their desire to bring their own alcohol, or they may believe that it detracts from the overall value of the dining experience. On the other hand, some diners appreciate the flexibility of being able to bring a special bottle they have been saving for the occasion.
  
  
• Alternatives: Not all diners are keen on paying a corkage fee, and in such cases, some will choose to dine at places that don’t charge one or offer lower corkage rates. Others may simply opt to purchase a bottle from the restaurant’s wine list, even if it’s more expensive, in order to avoid paying the corkage fee altogether. For those who want to avoid corkage fees entirely, it’s essential to check a restaurant’s corkage policy before booking.
  
  

Despite the potential costs, some diners may also find that bringing their own wine can enhance their dining experience, especially if they have a particular bottle that pairs well with the menu or if they’re celebrating a special occasion. Ultimately, it’s about weighing the pros and cons of paying the fee versus buying from the wine list.

4. How Do Corkage Fees Affect Restaurant Owners?

For restaurant owners, corkage fees are a way to ensure that their business remains profitable while accommodating customers who prefer to bring their own wine. While corkage fees can certainly provide some advantages, they also come with their own set of challenges.

• Revenue Generation: As mentioned earlier, corkage fees serve as an additional revenue stream for restaurants. They allow restaurants to recover the costs of serving a bottle of wine that was not purchased from their wine list. In some cases, these fees can help offset the cost of running a full-service restaurant, which involves significant overhead for staffing, equipment, and inventory management.
  
  
• Customer Satisfaction: While corkage fees benefit restaurants financially, they can sometimes create friction between the restaurant and its customers. Diners may be frustrated by the unexpected charge, especially if they weren’t aware of it in advance. It’s crucial for restaurant owners to find a balance between implementing a corkage fee and keeping customers happy. Overcharging or failing to communicate the fee properly can lead to negative feedback and potentially lost business.
  
  
• Setting the Right Price: Determining how much to charge for corkage can be tricky. Set the fee too high, and customers may feel it’s not worth bringing their own wine. Set it too low, and it may not fully compensate for the service provided. Many owners look at competitors' corkage rates in the area to gauge what’s reasonable, but the right price will depend on several factors, including the restaurant’s location, dining style, and clientele.
  
  
• Reputation and Market Positioning: Corkage fees influence how customers view a restaurant in the market. If the restaurant is located in a high-end neighbourhood and is known to offer an excellent experience, customers might not insist on bringing their own wine. However, their expectations with small to medium scale eateries are that the corkage fee shouldn’t exist or at most, it should be minimal. Choosing how to implement a corkage fee depends on your understanding of your restaurant’s customer base.

And, if the corkage fee dissuades customers, you can always try and influence them with your bar and drink options to complement a meal. Check out these popular 25 Fruity Cocktails to serve at your restaurant.

5. Best Practices for Setting Corkage Fees

Restaurants don’t randomly assign a corkage fee in competition with what everyone else is doing. For them, its a carefully crafted policy that keeps in mind what the customer can afford and what the business needs.

When done correctly, corkage fees can contribute positively to your restaurant’s bottom line while also fostering goodwill with patrons. Below are some best practices for setting corkage fees that benefit both parties.

1. Consider Your Location and Market:

Your restaurant’s location plays a crucial role in determining the appropriate corkage fee. Fine dining establishments in upscale neighborhoods may justify higher fees due to the level of service and the quality of food and drink they offer. On the other hand, casual dining spots or local bistros may want to keep the corkage fee lower, or forgo it entirely, to attract more customers. Know your market, and adjust accordingly.

2. Be Transparent:

Transparency is key when it comes to corkage fees. Make sure your corkage policy is clearly communicated to customers before they arrive. This can be done through your menu, on your website, or by informing patrons when they make reservations. Being upfront about the cost avoids surprises and prevents negative feedback later. If customers know what to expect, they are more likely to accept the fee without resentment.

3. Offer Discounts for Special Occasions:

Consider offering special pricing for certain customers, like regulars or those celebrating special occasions. For example, you might offer a discounted corkage fee for patrons who book large parties or return frequently to your restaurant. Additionally, special discounts for birthdays or anniversaries can create a memorable experience for customers and encourage them to return.

4. Make It Flexible:

Corkage fees don't have to be set in stone. Being flexible with your corkage policy can make your restaurant more appealing to a broader audience. You might offer a discount for larger parties or offer the first bottle free if a customer buys a second bottle from your wine list. Some restaurants also reduce corkage fees on slower nights to encourage traffic.

5. Offer a Wine List with Alternatives:

While corkage fees can be a great way to increase your revenue, it’s also important to offer a diverse and enticing wine list of your own. A well-curated selection can make it less likely that customers will bring their own wine, as they’ll see value in what’s available at your restaurant. The better your selection, the less likely they’ll need to bypass your offerings, even if there’s a corkage fee involved.

A good corkage fee policy should be part of your business plan when starting your restaurant. Not only does it help you establish authority but it helps improve profits and menu optimization.

6. The Feasibility of Corkage Fees: Pros and Cons for Restaurants

There are a lot of pros and cons to consider when trying to implement corkage fees at a restaurant. Corkage fees can have a significant impact on a restaurant’s profitability, customer satisfaction, and reputation. Here’s a closer look at the advantages and challenges of corkage fees for restaurant owners:

Pros of Corkage Fees for Restaurants

1. Additional Revenue: Restaurants get an extra income to help cover the cost of service and glassware when customers bring their own wine.
   
2. Encourages Wine List Sales: It can also be a good way to make diners consider looking at the restaurant’s wine list instead of bringing their own drinks.
   
3. Control Over Alcohol Service: Charging a corkage fee also helps restaurants control what alcohol is served to the customers to avoid any mishaps.
   
4. Market Positioning: They also determine how a restaurant is positioned and perceived in the market. If the service is excellent, people often don’t mind the corkage fee.
   
5. Quality Perception: Charging for corkage can signal quality, as it reflects investment in wine service and professional handling.
   

Cons of Corkage Fees for Restaurants

1. Customer Frustration: If you don’t inform the customer about the corkage fee clearly, they can get annoyed and leave bad reviews online.
   
2. Lost Business to Competitors: Some customers might see high corkage fees and choose to go to restaurants that charge less or no fees at all.
   
3. Complex Pricing: Setting the right fee can be tricky; too high or too low can negatively impact revenue or customer satisfaction.
   
4. Administrative Effort: Managing corkage fees requires extra training and tracking, which means more manpower and billed hours.
   

Impact on Loyalty: Some customers may feel the corkage fee reduces the value of their dining experience, harming repeat business.

7. Using Restaurant Management Software For Corkage Fees

Managing corkage fees and ensuring they are implemented smoothly can be a challenge, but the right tools can make the process easier. Restaurant management software, like Supy, can help streamline corkage fee management, ensuring a seamless experience for both customers and staff.

With Supy, restaurant owners can set and track corkage fees efficiently. The software allows you to:

• Track Corkage Fees in Real-Time: You can easily record and manage corkage fees per table with Supy’s integrations, ensuring that every charge is accounted for.
  
• Offer Discounts or Promotions: Supy makes it simple to offer discounts or special promotions related to corkage fees. For example, you can set up automatic discounts for special occasions or frequent diners.
  
• Communicate Policies to Customers: Supy can help automate customer communication, ensuring that corkage fees are mentioned in reservations, menu updates, or online ordering systems.
  
• Generate Reports: By using Supy’s reporting features, you can track how corkage fees are affecting your bottom line. This helps you adjust your policies based on real data.
  

With Supy, managing corkage fees becomes less of a hassle and more of a strategic tool to boost revenue and customer satisfaction.

8. Conclusion

In the restaurant industry, there are many tools businesses use to maintain profit and reduce unnecessary expenses. Corkage fees are one of the tools that help businesses cover their service costs while promoting their in-house wine selection.

For a business, this fee can be very important—you want to seem like the type of eatery that has control over its beverages and a policy that customers adhere to. Similarly, every business in this industry looks to get the high markup that is often placed on wines.

As a customer you might find that this fee is just an additional charge on the costs of eating out. However, corkage fees help you experience the restaurant’s own wine selection that they intend for the dishes you order. It can boost your dining experience and open your palette to a new variety of wines.

If you’re interested in learning how to wow your customers, check out Supy’s podcast, WOWing Your Restaurant's Guests.

9. About Supy

Supy is a restaurant management software platform that's built to help restaurants improve their operational efficiency and keep track of charges like corkage fee. It has features like inventory management, menu engineering, procurement systems, and real-time analytics that help lower costs and boost profits by a margin. It is the go-to tool for restaurants looking to establish a stronghold in this competitive industry.

For more insights on how to run and manage a restaurant, consider checking out Supy's new all-inclusive ebook, The Ultimate Guide to Reducing Food Costs in Multi-Branch & Enterprise Restaurants.

Interested in improving your restaurant business? Schedule a demo with Supy and see the difference for yourself!

Related Resources

• Webinar : The Food Cost Reduction Secrets Of Multi-Branch Businesses
• How To Calculate Food Cost Percentages
• 10 Ways To Reduce Food Cost - 2024 Edition
• 10 Tips To Reduce Restaurant Food Waste

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FAQ

Why is reducing food costs important for a restaurant?

Reducing food costs is essential for maximizing profit margins, minimizing waste, and improving the overall financial health of a restaurant.

What is a sustainable food cost percentage for a restaurant?

A sustainable food cost percentage typically falls between 28-35%, though it varies by restaurant type and pricing strategy.

How can portion control help reduce food costs?

Portion control prevents ingredient overuse, ensuring that food costs remain consistent and predictable across dishes.

What is the impact of bulk purchasing on food costs?

Bulk purchasing often lowers the per-unit cost of ingredients, but it should be balanced with storage capacity to prevent waste.

How does an inventory management system help reduce food costs?

An inventory system helps track ingredient usage, prevent over-ordering, and reduce waste, thereby lowering overall food costs.

Why is monitoring waste essential for reducing food costs?

Monitoring waste allows restaurants to identify sources of loss and implement waste-reduction practices to save on food expenses.

How can menu engineering reduce food costs?

Menu engineering helps identify high-cost/low-profit items, allowing adjustments in pricing, ingredients, or portion sizes to improve profitability.

What role does staff training play in food cost management?

Training staff on portion control, waste reduction, and efficient food handling can significantly lower food costs by reducing errors and waste.

How does sourcing local ingredients help reduce costs?

Local sourcing often reduces transportation costs and shortens the supply chain, potentially lowering food costs while supporting local economies.

What is the benefit of negotiating with suppliers?

Negotiating can secure better pricing, payment terms, or discounts, helping to reduce overall ingredient costs.

How does monitoring food cost variance assist in reducing food costs?

Monitoring variance identifies discrepancies between expected and actual costs, allowing adjustments to maintain budget targets.

What is the value of a standardized recipe in cost control?

Standardized recipes ensure consistency, control ingredient costs, and maintain portion sizes, which aids in food cost management.

How can seasonal menu adjustments reduce food costs?

Seasonal adjustments allow restaurants to use ingredients when they are most abundant and affordable, helping to lower food costs.

What impact does reducing food waste have on food costs?

Reducing waste minimizes losses, helping restaurants save money by fully utilizing purchased ingredients.

Why is accurate forecasting important for food cost control?

Accurate forecasting helps align inventory with demand, minimizing waste and preventing overstocking of perishable goods.

How can technology assist in reducing food costs?

Technology, such as Supy’s inventory management tools, enables real-time tracking, demand forecasting, and data analysis to optimize purchasing and reduce waste.

What are some best practices for managing perishable inventory?

Best practices include using the FIFO method (First In, First Out), labeling expiration dates, and regularly checking inventory for spoilage.

How does supplier consistency impact food cost management?

Consistent suppliers reduce the risk of unexpected price changes, enabling more predictable food cost management.

What role does menu pricing play in food cost control?

Properly priced menu items ensure profitability by covering ingredient costs and contributing to overhead and labor expenses.

How can cross-utilization of ingredients reduce food costs?

Cross-utilizing ingredients across multiple dishes minimizes waste and allows bulk purchasing of key ingredients, reducing overall costs.