I follow the restaurant scene in New Orleans pretty closely which is not uncommon here because of the importance we place on eating well. It’s not unusual to hear that the start up cost on a new higher end place to be between 3 and 5 million. I would imagine a substantial part of that involves the building an appropriate collection of wines for what the restaurateur intends to do.
There are only a few places over the years that made it clear that brought in wine was not allowed. There are others that have made it clear that it’s not encouraged by having unusually high corkage for this city. Now from my perspective, that only becomes a problem when the restaurant’s wine prices are what I consider to be exorbitantly high, in the range of 3-4 times retail.
All of that said, I both totally understand and accept why a restaurant might choose to price their wines higher than I’m comfortable paying. It has to be many years before they begin to recoup their investment and begin to show a substantial profit. If they make a business decision to structure their pricing at a level that only draws people who not only can pay it but will pay it, there is nothing wrong with that approach. They have no fiduciary to accommodate wine geeks looking to drink their retail purchased wines within the owner’s 3-5 million dollar investment. If the place excludes me by that practice, there are plenty of other places within my means where I can enjoy myself.
Your thoughts?
I’d rather have a smaller, well-selected list to choose from, rather than pay exorbitant prices because a restaurant is sitting on inventory.
YMMV.
They can price it wherever they like. If it doesn’t suit me, I stay away or don’t order wine (usually the former). If they can survive on what other people are willing to pay, bully for them
Michael,
I recently ate at La Petite Grocery and found their list to be reasonably priced and even a bit geek centric. Loved the restaurant.
Mike
I don’t think in real markets and businesses, pricing is based on some calculation of cost plus profit margin. It’s determined by what maximizes your return. The market has its own logic. If you maximize return by selling Bottle X for $79, then that’s what you sell it for, regardless of what you paid for it or how long you’ve held it.
Restaurants can charge whatever they want. If it’s too expensive, I will pass or buy beer. BYO is very rare here, and the mentality is to make huge profits on alcohol. I really do think many places could make more money but less margin by lowering their priced and selling more volume, but that takes courage to try. Most places don’t want to do that. Its their business their choice.
Great uptown restaurant. Glad you enjoyed.
A bit of an extrapolation, but: https://screen.yahoo.com/popular/hotel-charges-man-127-three-214017702.html?vp=1
+1. Why make all the money back off the wine drinker?
If you don’t like the price send a message and order water. No seriously!
I have certainly done this before, in a reastaurant with great food, yet who marked current vintage, widely available Sauv blanc at 4-5 time retail. It was a favourite place, but I got so fed up I just stopped going in the end.
Beer or water suits me in when the wine prices are obscene.
I wonder what would happen if you had a conversation with the owner. Our favorite local place in NJ where we are regulars is a BYO thankfully. But if they had a winelist that was egregiously priced, I think I might have a polite conversation with the owner laying out my concerns.
This same place that I’m talking about recently opened a second restaurant. My wife and I were there on opening night. There were aspects that I loved and aspects that I didn’t enjoy. When the two owners came to our table, I told them what I honestly thought. Some of the things that I brought up were addressed within days, some were addressed within months. On the few things that they didn’t change, I’ve had a open dialogue with the owners and have come to understand and appreciate their position.
Ian, FWIW, I totally agree with you and won’t order wine at gouging prices. But it’s a shame that you felt the need to stop going to a place you enjoy. Cheers.
Coming back to Michael’s original scenario, if a restaurant has indeed invested in a wonderful varied cellar with wines at reasonable maturity, then they could certainly justify 3 times current retail price. If that were an astutely chosen small barbaresco producer and say a 1996 vintage, then 100-150 dollars might be reasonable even if that producer sells current vintage at cellar door for 40 dollars.
The catch to that is many places just have current vintage and may even have the wine on sale or return, so the outlay is way less.
Wine drinkers do need to pay for the following in pricing restaurant wines
- returns, though sometimes this is well covered by the suppliers
- costs of buying, storing and keeping the wines
- costs in maintaining the wine list
- a proportion of wait staff and management costs
- a proportion of general property costs
- a proportion of any additional costs associated with running the place, e.g advertising, website, bookings
- a proportion of profits
It should not however pay a proportion of kitchen / kitchen staff costs, nor should it be used to subsidise the food costs as is so common here, as restaurants are obliged to put prices on menus displayed outside the restaurant, but only for the food. I am sure this encourages the mindset of making the money on the drinks.
A good way to keep a great list is to carry 3-5 million dollars worth of inventory, price it out of site so no one purchases the wine, and you have a great list to read while you are ordering a beer.
When will restauranteurs wake up and price their list to sell? They would go through ten times the wines (especially on the high end) and actually turn that damn inventory rather than collect for a museum. See Berns in Tampa Florida to see how it works -
Purchasing a wine for $100 a bottle and pricing it at $200 a bottle brings back enough profit to survive, and offers a real bargain to the wine drinker.
Make your money on the wines by the glass and low end wines - low priced high end wines bring in the heavy hitters who have no problem paying $22 for a side salad.
I think I agree with Thomas post above.
Bring the big boys in for the bigger parties or expensive plates but $200 for a $65 bottle of wine is going to only go so far.
Funny thing is, I assume most restaurants are perfectly happy to make a few bucks off a group that orders beer. Most restaurants don’t have millions of dollars tied up in wine inventory, they’re ordering in wine regularly just like they do beer.
or iced tea if there are no palatable beers–which I find is often the case in restaurants here. In Oregon, microbrews are all about the hops–who has the hoppiest. I figure it’s a phase–like high-octane Aussie Shiraz ten years ago–that will pass.
Generally I agree that they can charge what they want and it’s my decision to take it or leave it. Indeed, this is the reason I very rarely buy wine off a list in a restaurant. I don’t, however, see how that’s a defense of restaurant wine pricing. Seems like the opposite to me.
Funny how we’d expect the wine drinkers to fund the investment in building a restaurant, when it’s certainly acceptable for anyone there to drink water or beer or iced tea. For me, the justification of a very high markup wine list is not to cover the cost of construction of the restaurant, but to cover the cost of properly storing and aging a deep selection of properly aged wines on the list. Pretty much all average restaurants fall short of even coming close to that, yet still want 300%+ markups on wine that can be bought any day off the grocery store shelf.
Rather than defend the practice, I’d encourage others to not participate in it. That kind of participation is part of the free market too.
I am not clear on whether or not you are referring to their investment in the restaurant as a whole or just the wine program, but I would not make the assumption that a restaurant offering back vintages has cellared those wines. It is far more efficient to source back vintages in the secondary market.
Interesting topic. All else being equal, if a restaurant marks up their wines reasonably (maybe 2x or less), I will be much more inclined to return and bring friends than one that marks up their wines 3x+. It’s their prerogative to mark it wherever they see fit but, ultimately, it’s a matter of supply and demand. Would be fascinating to see an economists analysis of where the break even point is. Would they rather gouge me once or make a nice margin twice, three times or more? Guess it depends on their target demographics - are they targeting wine drinkers or beer drinkers.