A sommelier explains why a $15 bottle of wine can be marked up 400% in a restaurant

If you think that most restaurant operators are getting rich, especially by selling to us wine geeks, think again. I do not begrudge wine list pricing, but simply BYOW when possible.

Also problematic is when you know that the biggest value is the most expensive thing on the list! I can’t count the number of time I’ve spent way more in absolute terms than I wanted to because there was a “great deal” of that sort.

I agree with you on the “don’t play the game”. I rarely drink by the glass offerings anywhere(exceptions are Davenport, Ken’s Artisan Pizza, and Le Pigeon. All have lower than normal btg markups and very good wines to choose from).

However, while every restaurant brews coffee to add value, the cost of managing a wine list is HUGE comparatively. We never carried more than $200-300 in coffee inventory and once we had identified the blends we wanted, the coffee programs really only required brewing and cleaning.
By contrast, at the Heathman we carried $90,000-$125,000 in wine inventory and managing the logistics of a 400+ bottle selection alone-receiving, checking to make sure the vintage, producer, cuvée, and provenance of the order was correct, stocking the wines correctly and removing the packing to recycling(this takes hours each week in a busy restaurant), educating the staff on new wines, updating vintage changes, tracking corked and flawed bottles for return, tasting and selecting new wines to add, entering new wines into POS, identifying wines that are mature but need to be sold ASAP, etc. etc. etc. are not things I needed to do to manage the coffee program.
Food is definitely different, but again, nowhere close to the inventory choices or dollars that are tied up in a good wine program.

Last add, I don’t think that many restaurants in Portland are selling $6btls at $30 unless you’re at an Olive Garden or this type of place.

We are insulated here on the forum as wine people so, of course, going out to eat usually involves wine. But do ever think of the % of diners that actually bring wine to a restaurant? I talked to an owner, whose policy was free, yes FREE, corkage and he told me maybe 1% of people bring their own wine(maybe I was that 1%). I can sort of vouch for that since I’ve been to that restaurant 100’s of time and only once did I see someone bring a bottle with them. So even with free corkage, hordes of people aren’t schlepping their own bottles. So we are not the large #'s that restaurateurs care about.

And then there’s the pricing of the wines on the in house wine list. There was a place in LA, Bruno’s in West LA(BTW, the same place where they filmed a lot of Columbo’s), that had retail pricing on every wine on their list(and it was a good list). The owner said it would encourage more wine sales. It did, but even then he went under anyway because, well, that’s what restaurants do.

For most restaurants wine is just another commodity they sell trying to stay afloat. Most don’t have the passion for wine that we here do here. I can’t blame them no matter what their policy 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?

This was exactly the policy at Landmarc in NYC. When he first opened, other restaurant owners publicly stated that they hoped he’d go out of business fast. I went in and saw Ridge Geyserville for $30 and decided that would be one of my favorite restaurants for times when I didn’t have wine with me. Not only was it a successful formula, he opened another restaurant where Charlie Trotter closed.

To do that however, he has to turn inventory quickly. That means no list like Berns. Wine comes in, wine goes out. Keeping a bottle for a few years isn’t going to happen.

The other thing he did was eliminate wine by the glass entirely. Instead, there are half bottles. No worry about whether the bottle is fresh or has been open for a few days - they’re all fresh. After a few of us became friendly with the wine director, he’d let us bring our own wine anyway, but I loved that model.

The restaurant business is just one of the many things I know nothing about. But if the restaurant has $100k in inventory and logistics in its wine program, they can recover that by selling X bottles of wine at 400% markup or, I would think, by selling 4X bottles of wine at a much, much smaller markup. What those number are, I can’t say, and perhaps demand for wine is just so inelastic that most diners who want wine will pay whatever the restaurant asks, and lowering the price would not increase demand. I don’t think that is true, but I could well be wrong (although Greg’s experience suggests I might not be).

Sorry Neal, we didn’t run a 400% Mark up on the vast majority of wines, only by the glass options. That was typically a situation where the wholesale price equalled the glass price(as noted by the somm in the article).
Bottled wines typically were marked up between 200-300%. Turley, Leonetti and Silver Oak at the high end(this is 2002 btw) and things like Alain Graillot, Baudry Chinons and Chandon de Briailles at the lesser end.

We also did 1.1 million in wine sales per year, about 25% of which was by the glass. As noted above the vast majority of glass sales were to people who wanted a good glass of wine but didn’t care about much beyond that. I worked very hard to find smaller producers to fill our btg program during my tenure with the list. But the margin on glass pours was still high(although the net profit at the end of the year was only 10-13.5%, which is actually good for a restaurant).
I also openly recommend restaurants like Davenport to WBers and other assorted wine geeks visiting or living in PDX. It’s small, owner operated, and a special niche for the avid wine geek. I host tastings with Davenport restaurant as well, because what they are doing is special and needs to be supported.

It comes down to “what is it worth to YOU”. Sometimes drinking a $30 bottle in that environment enhances the overall experience by $100 equivalent.

Sorry if that last post comes off as being on my high horse. It’s really just meant to be expository in nature.

Not at all. Like I said; I know nothing about the business, much less this particular set up. I used the figures above only as a hypothetical. You can usually sell a lot more widgets at a lower price; I don’t understand why the same doesn’t apply to wine in restaurants. That was my only point

What I hate as much as the aggressive pricing is when the wine list looks like a list of wines the wholesaler could not sell anywhere else.

+1 - Unfortunately because of the lack of variety available or knowledge of the beverage managers (maybe both) I find that in Pittsburgh maybe more than anywhere else. It’s getting better, but so many bad lists. You can usually spot them as soon as you’re handed the list… the lack of vintages is a dead give away.

Neal’s disclaimer applies to my comment as well.

When Lauren and I go out to eat, wine by the bottle can easily double or triple the check so we’re considerably less likely to order a bottle even when we see something we like. Like people have hinted at, we’re kind of a niche subset of the dining populace, but I think for me wine is absolutely price elastic in a restaurant. I mean, there’s even places I’ve gone to dine specifically because they had a great bottle at a reasonable price. I’m a gigantic wine dork and the markup frequently dissuades me from purchasing, I can’t imagine what it must be like for someone who is neutral on wine or knows nothing about it.

And Marcus, I appreciated your explanation, I’m not ITB so a peek behind the curtain is always welcome!


Unfortunately that is not an option in Texas if the restaurant has a liquor license. As a result, we simply get skinned on wine prices, and it does not seem that most places depress food prices to compensate.

The PLCB isn’t much help. Pittsburgh’s restaurant “renaissance” is relatively recent and there aren’t a lot of restaurants that emphasize wine so far. I take it that you cover the Pittsburgh market and don’t live here.

You’re feeling is generally correct but at the Heathman(a busy downtown Portland restaurant), volume wasn’t the issue. A downtown restaurant with a theater next door and a James Beard award winning chef is selling a lot of widgets, it’s things like the cost of square footage that makes profitability hard. We had a high rent and paid a percentage to the hotel the restaurant was attached to, so selling a lot of widgets at a high price was the only real key to success.

It’s not all that different a model from some of the board darling wineries here, where nothing is spared on the wine quality but that requires the resulting wines to need to be well above the $30 range.

One reason really cool, high quality restaurants often pop up in industrial areas is the fixed costs are much lower. These are also places where lower wine mark ups and special pricing(half priced bottle nights) can bring in the extra guests the restaurant needs.

It worth noting that while I worked at the downtown restaurant, my winery resembles the industrial area restaurant. I bought Peter Michael’s old press and refurbished it myself-total expenditure $25,000 as opposed to buying a new press for 2-4 times as much. By keeping costs low I can make the wines I want to make and charge a bit less for them than many other wineries can. I can also hold the wines longer before release, all of which matter to me but would be unlikely to trump the marketing budget if I was in a high $$ space that necessitated high $$ returns.

Frankly, a 400+ selection seems like vanity to me and is not something I am willing to pay to support. More and more, I have given up and go to restaurants where I can bring my own wine.

What I hate as much as the aggressive pricing is when the wine list looks like a list of wines the wholesaler could not sell anywhere else.

That’s because unless it’s a place that really cares about wine, they get the wine from the liquor salesman. Liquor is where they make their money. And people are brand-specific when it comes to liquor. So you need to have Bacardi, or Patron, or Stoli, or whatever. Wine people aren’t like that. So if you’re the manager you tell the guy who’s bringing you the gotta-haves that you need a few cases of a red and a couple of whites. This isn’t the story when it comes to wine restaurants, but it’s the case when it comes to most places. Remember that for most people who aren’t on this board, Chardonnay, Cab, Merlot, Pinot Noir, are generic wines.

I always wonder why Restaurants in Italy are able to run their business successfully with small mark ups on their wine program but Restaurants elsewhere in the world can´t.