Restaurants have always had house wine. The traditional house wine is a generic bulk red or white, sourced cheaply, marked up significantly, and poured under the restaurant's name on the list. The custom-label house wine, increasingly, is replacing the generic option. The economics are similar; the brand effect is meaningfully different.
The economics
A restaurant pouring through twelve cases of house wine per month, at twenty-five dollars per glass, pours roughly one hundred and forty four bottles per month, on which the contribution margin is the entire revenue minus the cost of the wine, the labor, and a small allocation of overhead. Replacing the wine cost with a custom-label cost at fifty to sixty dollars per bottle is approximately revenue-neutral at typical pour pricing, with the brand benefit added on top.
The brand effect
The guest who orders a glass of the house wine, and is served from a bottle that carries the restaurant's name in foil, has a different relationship with the restaurant than the guest who is served from a generic bottle the server hides on the counter. The bottle is the brand. The label is the marketing dollar. The restaurant gets the brand benefit at the cost of a slight wine markup.
Operational notes
Custom-label restaurant wines should be ordered in twelve-case quantities every quarter. Forty-eight bottles is the minimum for the program; restaurants typically order three to four cases of red and three to four cases of white per month. The label can be updated annually with a vintage change. The brand line should not change; the brand line is the restaurant.