Hospitality is finally getting back on its feet. This means that many hospitality venues are looking for ways to make improvements to their business. In particular, they’re looking for ways to improve their processes and their profitability. Here’s a quick guide to what you need to know about corkage fees.
What is corkage?
A corkage fee is a fee charged to a customer for consuming their own beverages on a venue’s premises. Corkage fees are generally associated with wine, largely because wine is the beverage most commonly drunk with a meal. Corkage fees can also be charged on long drinks (e.g. beers and ciders), spirits and even soft drinks.
The law and corkage fees
In the UK, you need a licence to serve alcohol that is consumed on the premises. You do not need a licence to sell alcohol that is consumed elsewhere. Similarly, you do not need a licence to allow people on your premises to consume alcohol that they have bought elsewhere. It is entirely legal to charge corkage fees as long as the charges are transparent.
Why do businesses charge a corkage fee?
The main reason why businesses charge corkage fees is to recoup the costs of serving the alcohol. Some businesses may also charge a corkage fee to help recoup lost bar profits.
Despite the name, a corkage fee does not just cover the waiter’s time uncorking the wine. It also covers the costs associated with pouring it and washing up the glassware afterwards. In some cases, it also covers the cost of bringing the wine to the right temperature. Realistically, a portion of it is also going to need to cover the occasional but inevitable breakages.
If a venue has an alcohol licence, a corkage fee also helps to cover lost revenue from in-house alcohol sales. This cost still needs to be paid even if it’s only used by a limited number of patrons. Fine-dining restaurants in particular often invest heavily in curating wine lists and hiring and training staff.
Corkage fees also help to discourage customers from spending too long at restaurant tables. Alcohol is known for its ability to slow people down. This applies to eating too. People enjoying a glass of wine, beer or spirits tend to take longer to finish their meal. This needs to be taken into account when setting in-house prices and corkage fees.
What is the average corkage fee?
In the UK, corkage fees are generally charged per bottle opened on site. They may differ according to the type of alcohol. Currently, average corkage fees are around £12–£15 for still wine, £15–£20 for regular sparkling wine (e.g. Cava or Prosecco) and £20–£35 for champagne.
There is quite a bit of variation. In some venues, the corkage fee can be as little as £3–£5 per bottle or as high as £45–£65. As a rule of thumb, the higher a venue’s prices in general, the higher its corkage fee.
What type of venues typically charge a corkage fee?
The only venues that charge corkage fees are venues that allow customers to bring their own alcohol. In the UK, this means event venues, fine-dining restaurants and casual restaurants without an alcohol licence.
Should your business charge a corkage fee?
If you sell alcohol, allowing BYOB creates competition for your in-house sales, so it makes sense either not to allow it or to charge a corkage fee. If your venue is an event destination, you can split the difference. For example, allow BYOB for groups of a minimum size and by prior arrangement, and then make the decision on corkage fees on a case-by-case basis.
If you don’t sell alcohol but plan to do so, allowing unrestricted BYOB may create problems for the future. As the old saying goes, you can turn a no into a yes but not a yes into a no. If you’re committed to selling alcohol on-site, then assess the issue of corkage as though you already were. Alternatively, you may wish to abandon your plans to sell alcohol.
If you don’t sell alcohol and don’t plan to, still think carefully about the potential impact of allowing customers to drink on your premises. Would it actually help to attract more customers? Would they be the sort of customers you wanted? How would you feel about handling customers who’d had a bit too much? What about turnover levels?
Even though you wouldn’t actually be losing anything from in-house sales, it can still make sense to charge a corkage fee. This can help encourage customers to keep their drinking moderate. If you later decide that it isn’t really necessary, you can always cancel it.
How to set a corkage fee at the right level
Ideally, set a corkage fee at a level that reflects the impact BYOB has on your business. In the real world, you may not know what that will be until you try it. If you already sell alcohol, then calculate your average markup on alcohol and set your corkage fee at that. If you don’t, research your competition and set your corkage fee at that. In either case, be prepared to adjust it as necessary.