A sommelier explains why a $15 bottle of wine can be marked up 400% in a restaurant
the reasons are sundry
That pretty much covers it for me.
That’s a pretty accurate article. To be fair most restaurants profit margin at the end of the year is less than 10%, and few make it to 15%.
Another way to look at it is that higher wine prices keep the food less expensive, which is better for those of us who bring our own wine to places with moderate to low (or no) corkage.
Oh, if it were so…
What’s the mark up on food, coffee and water?
The difference, of course, is that the restaurant actually does something with the food (and to a lesser degree with the coffee) to make it more valuable.
This is the most telling passage: the question is “whether management thinks the customer will notice: ‘A restaurant that purchases a bottle for $5 wholesale can mark it up a dizzying 600 percent to $30 without most diners noticing,’ he writes.” Fact is, most people have no idea what they are drinking much less how much the markup is.
I’m no longer interested in the “is it fair” question. My question is whether it is sensible. If a restaurateur carries a decent selection and prices his list fairly, I would be far more inclined to buy from him. Want to sell more wine? Price it fairly. Want to charge me $70 for a bottle of Ridge Three Valleys? I won’t play. Would you rather have a decent markup and actually make a sale or list a monstrous markup on wine you don’t sell?
I am so glad that all of us know more about how restaurants should be run than the owners know. We are so very much entitled to low wine prices and low corkage fees. All those restaurants that keep going out of business must not be listening to our sage advice: the key to making ends meet is lower prices for us.
Phil Jones
Quite often very little. I listed water too…
Like overpriced wine, I never ever buy water at a restaurant.
I want to know what the corkage fee was when Jesus turned water to wine…?
I avoid alcoholic drinks in restaurants as much as possible. Mostly I order water or the $5 ice tea with free refills. It’s sad that the meal they prep doesn’t get the markup it deserves.
For me and my dollars, I appreciate drinking good wines at a good value. I can best do that at home. When I go out, I do enjoy wine but it’s more of a simple pleasure. An inexpensive bottle of barbera or chardonnay is just fine. If I want to have a wine that demands more of my attention, chances are I will do that at home. It upsets me to pay 3x retail for an expensive bottle of wine.
That’s a fairy snarky and unnecessary comment in an otherwise rational thread discussing people’s thoughts on markups. I don’t see anybody here expressing a sense of entitlement. They are merely stating their thoughts on the matter.
As for the merits of your comment, the end (restaurants going out of business) is very often because they fail to price appropriately for their market, whether it be on wine or food. If they went out of business, it is often because they did not take in enough revenue to cover costs and make a reasonable profit (although there are myriad other reasons such as age, family issues, etc.) Many could have saved themselves if they were wise enough to adjust their model and bring in more business. That’s why you see free corkage nights at some places and half price wine nights elsewhere. They are effectively lowering their prices to bring in business. If a place is doing well and filling its seats, they can charge what they are charging and be fine. But if a place is barely making it, or failing, they should do whatever it takes to fill the empty seats and bring in that marginal revenue. One way to do that is being known for having a fairly priced wine list (or allowing free or low priced corkage).
I appreciate being able to buy wine in restaurants, despite mark-ups. I exclaim just like everyone else when they are egregious, and am appreciative when they are reasonable. Basically, I like wine with my dinner, though, and sometimes that means “overpaying” for the pleasure of having it. We bring our own wine nearly all the time when eating out in the city where I live. But I travel a lot, and don’t care to schlep wine with me everywhere I go, even if it means getting to drink better. It’s rare that a decent wine list doesn’t have anything at a price I can stomach. Last night, I paid twice retail for a wine I like very much, and which I actually have in my own cellar. I didn’t have to carry it with me from Philly. I didn’t have to lug it into the office with me in the morning, or on the subway to the restaurant. It was served to me at the proper temperature and without having been shaken up. It was delicious. I was happy to find it there, and twice retail seemed ok to me.
My family never understands why ordering wine for everyone is so difficult. They pass me the book everywhere we go, and expect me to just instantly pick an incredible bottle. But being in retail and getting nearly all of my wine at home at cost makes the process extremely painful! I search and dig until I find something that causes the least amount of pain. I am extremely grateful when we come across a restaurant that has reasonable prices on their list. It still stings, but not quite as much… That being said, we BYO as often as possible but I always make it a point to try and purchase at least one bottle off the list if I’m bringing multiple bottles along.
Though I despise ridiculous markups regardless, a 400% markup on a $15 bottle is far less problematic to me than a 400% markup on a $50 bottle. Many of the costs associated with providing beverage service as cited in this article are fixed. However, I pretty much never order wine that’s marked up significantly more than 2X retail, nor will I bring my own bottle to a restaurant that charges high corkage. For a customer like me, expensive wine costs are a lose-lose for both parties.
+1
How many places have closed that could have tried a more economically rational wine list / corkage policy to get people in the door.
I used to try and convince restaurants that if they sold wine by the glass, it was generally a fair deal for them to allow corkage at 2 x (lowest BTG price - $1) or something, considering they didn’t wear TCA risk, employee theft, and the cost of actual buying/storing the bottle.
Nowadays I’m somewhere corkage is easy, so no need to. Or if its not, in rare circumstances, we don’t go there.
BYO is right up there in terms of something like ‘do they take credit cards’ as an essential condition when I’m picking where to go.
PS: nice dog. we’ve got a GSD too, a two year old named Blucher, who needs lots of exercise.
Thanks. Unfortunately that is an old picture and Hogan has been gone for a few years now. But I have not been able to bring myself to remove the picture from my avatar. I am sure will enjoy Blucher for years to come. I have a friend that has several and every time he posts pictures, I get the yearning to get another one. In the meantime, we make do with our daughter’s rescue dog, a Rhodesian ridgeback mix.
My take is the same, although I would word the question as “do I want to drink Bottle A for a price of $B?” There have been many, many threads about restaurant wine markups, corkage, etc. But if I’m at a restaurant and the wine list is front of me, it’s generally a simple set of questions–do I want to drink Bottle A in the first place, and do I want to pay the wine list price of $B?" Although the % markup is a factor, it’s not the only factor, esp. if the list is especially good/interesting, with various wines that aren’t easy to find. But if you have a list with large-volume producers at a wine list price many times what the same bottle costs in my neighborhood grocery store, then it’s hard to justify ordering it.
As for the article’s comment about hotel restaurants makes some sense, not all restaurants located in a hotel are created equal. But a significant issue is whether the restaurant is geared towards the one-time visitor (a hotel guest who is there one night and isn’t coming back) or whether the restaurant is geared towards repeat business, esp. with a local, non-hotel crowd.
Bruce