1668 WINERY: Bottom Line Improvements Brew for Upper Peninsula Establishment
Northern Initiatives helped pinpoint our margin deficiencies which resulted in significant increases in our bottom line. They provided financial coaching and guidance and suggested subtle, but effective marketing changes that clarified our product offerings, improved our ability to engage customers and increased our sales.
-- Ray Bauer,
Owner
Ray Bauer is the owner of 1668 Winery in Sault Ste. Marie, Michigan. The winery overlooks the St. Mary’s River and freighters that travel through the Soo Locks. It features an upscale pub menu, including gourmet pizzas and burgers, and their own handcrafted beverages. Bauer employs seven seasonal and two full time workers at 1668 Winery.
Challenge
1668 Winery opened in April 2015 and even though all the pieces seemed to be in place, there were issues. “The first season was brutal. Traffic to the new location was light, and we didn’t have the right mix of pricing, marketing, and menu,” stated Bauer. 1668 Winery faced problems with inventory management, unsustainable margins, and product control.
Solution
The Michigan Manufacturing Technology Center’s Upper Peninsula office, Northern Initiatives, helped pinpoint margin deficiencies which resulted in significant increases in the winery’s bottom line. They provided financial coaching and guidance and suggested subtle, but effective marketing changes that clarified our product offerings, improved our ability to engage customers, and increased our sales.
The deep dive into expenses revealed a possible new business proposition. Bauer hosted a popular weekly pizza night in his second business, a brewpub. The pizza was procured from a local vendor. With the purchase of a new pizza oven (a $5950 investment), they could add gourmet pizza regularly at 1668 Winery. As part of his retooling, Bauer took over purchasing responsibilities and created best practices for every item on the menu.
Results
- Retooling resulted in an increase of 250% on average in 2016 food sales for the summer months (May, June, July, August) over the same period in 2015.
- Wine sales for May-August 2016 increased on average 16.5% over 2015.
- In the second quarter of 2016, the new equipment resulted in increase of $1,170 top line income for 1668 Winery representing nearly 10% of total food sales for that period.