I am the opposite on any restaurant I like that serves alcohol. I understand that the restaurant has a better profit margin on alcohol and I want to support it.
I don’t try to get an inexpensive bottle. I try to get great QPR while attempting to match the wine with the food for a better experience.
I agree with you.
I agree with Jason. We already have too many threads of people complaining about corkage and wine prices. Restaurants are businesses that have a difficult time staying open and making ends meet. Enough already.
Phil Jones
nothing to be sorry about imho, great post.
![[cheers.gif]](/uploads/db3686/original/2X/0/0ff9bfcdb0964982cd3240b6159868fbdf215b1a.gif "cheers"){kind=small}
I am the wine director at a restaurant with a 700 selection wine list. We charge a pretty standard 3x wholesale for the majority of it, with some stuff I really like to emphasize closer to 2x.
In our business model the wine absolutely subsidizes food prices. The entrees are in the $30-50 range, which is pretty expensive in our market. I would love to be able to raise menu prices by 10-20% and subsequently bring down wine prices (or raise them even higher, eliminate tips, and pay our staff a reasonable hourly rate for the amazing work that they do. That’s a whole other conversation though.) but I think people are conditioned to pay less than then they probably should for food. I’m doubtful that the increase in business from wine enthusiasts realizing we have amazing prices would offset the drop in business from the much larger pool of non-wine-enthusiasts who don’t want to pay an extra $5-10 per dish.
First, nobody here is ripping on the restaurant business or saying that restaurant owners and workers deserve less. It is simply a discussion of what the general rules of the marketplace are and how that affects our decisions on where we will go and what we are individually willing to pay or not pay. As the owner of the restaurant, you should charge whatever you think will maximize your profits. End of story.
Second, if you don’t think that people negotiate legal fees and such, you are mistaken. Lawyers adjust their fees and billing practices to accommodate large clients that have the power to dictate terms and small clients that might otherwise be unable to afford the services. And, even then, people will complain that they are paying too much. That’s the way things are in most businesses, owners think they are not charging enough and customers think they are paying too much. So, no reason for you to feel picked on here 
First, I don’t personally feel picked on, I feel that the industry is continually being picked on, when you say no one is saying you deserve less, well that’s what the majority here are saying, inadvertently that is…
I understand that many people in different professions negotiate up or down their going rate, that’s assumed business, but the margin in those professions is much greater than in the service industry. In general the average is between %5-%10 profit, in most restaurants it’s more in the %4 range, the amount of fixed costs are much greater than in many other professions as well as recouping start up costs.
If once a month I would start a thread about how much a doctor, lawyer, civil servant, ect. overcharges there would be blowback and defensiveness, it just gets tiresome constantly reading about how the customer feels they are being overcharged in the service sector.
To me, I don’t complain about pricing in a restaurant, if I don’t like it or don’t feel that the value is there I simply stop going and keep my opinion to myself and vote with my dollar.
Jason said it better than I did.
Phil Jones
Jason - don’t forget that a lot of the people you are criticizing have worked in the restaurant/service industry. A good friend of mine, managing partner at one of the country’s biggest law firms, told me his favorite job ever was making pizza. He built a pizza oven in his backyard so he could do it again. But people made choices, which may have involved going into an industry that paid a little more and yes, that maybe required a bit more training and schooling. A plumber makes pretty good money because he deals with things you don’t want to deal with and because he has some learning and experience that you’re willing to pay for.
Somebody to carry a plate back and forth from a table to a kitchen? How many years of training and study does it really take?
And I understand that you can’t just take anyone off the street because some people are lazy, won’t show up, will skip out early, are difficult to work with, etc. And guess what? Everyone who runs an office deals with the same people. You want to run a law office or a doctor’s office? How do you find a secretary, someone to run errands, make appointments, deal with the public in a way that’s not going to send every caller flying to a competitor? My young neighbor just started work in a law office. She was waiting tables before that. She’s not going to stay at that job either because she has a PhD in genetics, but it’s not from this country so she’s looking for a way to get into her field. Every proprietor deals with similar issues when it comes to hiring help and charging enough to customers to pay staff wages and stay in business.
And there are many models for doing that. Some of which have been mentioned. Here’s another. Befriend your clients who bring wine. They can turn into good repeat customers and recommend you to other people who won’t necessarily bring wine. Not long ago I ran into someone who did exactly that. We became good friends and he loves wine, so would sometimes call to see if I wanted to taste something new. I can’t tell you how many people I sent his way. And I ate there often, without bringing wine most of the time. If he had told me he has a 400% mark up and a $50 corkage, I wouldn’t have eaten there once.
I don’t begrudge the people for charging what they charge. But if a competitor can do it as well and for less, well, no business has some kind of right to be patronized.
BTW, I have worked on all sides of the food and beverage industry - as a proprietor, as a sales rep, and as a customer.
And why exactly does this become an issue of class warfare? I think that those making far less than doctors and lawyers have just as much, if not more of a problem with wine markups in restaurants.
Can you point out where in this thread that people were “ripping” on service industry people? Or treating them as some sort of subhuman scum like you seem to be implying? I also think it’s laughable that the going rate of doctors and lawyers is just accepted. I don’t want to bring politics into this, but needless to say, health care costs are a huge matter of public debate in this country and around the world.
What we try to do when we have free corkage is tip more generously.
I increase my tip even when there is a normal corkage fee.
I don’t know why people seem to want to turn this into a moral issue. A business that charges “too much” for a discretionary service or product is not immoral. Someone who decides that a markup charged by a business is excessive and accordingly crosses a business off their list is not immoral. The restaurant can decide how to structure its business and I can decide whether to give them my business.
My questions above were simply about the wisdom of charging huge markups (and yes, a 200-400% markup is huge) that will discourage patrons from purchasing their products. It seems counter-productive to me, but hey, not my call to make.
I am an attorney and what justifies my billing rate is what the market will bear. There is a lot of competition - I deal with large corporations as clients and they will not pay for me if they can get comparable expertise at a lower price. And, they know what they can get from the competition. My earnings are based on price, expertise, whether I will meet or exceed deadlines, whether they like working with me, etc. It is not based on years of school, student loans, the price of education, what kind of lifestyle I deserve to have, etc. And, law firms are merciless to partners or associates who cannot meet billable hour, etc., expectations. Each year, big law firms fire many attorneys.
Similarly, you are in a very competitive business. I feel no more or less sorry for you for your costs than any of my clients do about me for my costs. I go to restaurants that provide a great experience for the cost. Whether a restaurant stays in business or not is not my issue - it is their issue. When law firms fail, and they do, nobody bails them out, or should they. Same with a restaurant.
I agree.
Adding to what Neal said, wouldn’t it make more sense to have a pricing scheme that favors selling wine rather that a standard markup scheme? To me, I would think a that a de-escalating markup schedule would make a lot of sense to help move more high-end wine. We all know that well priced wines on a list will drive more wine lovers to your door and they’ll be more likely to buy multiple bottle.
Wouldn’t a system of markup that has a targeted nominal return rather than overall return percentage be better? Let’s say you target a return of $20 on low end bottles ($5-10 wholesale/300-400% markup), higher up to $30-50 for mid priced bottles ($20-40 wholesale/100-200% markup), and $50-100 return on higher end bottles ($40-200+ wholesale/50-100% markup). This puts some very high end bottles close to retail pricing but I don’t see anything wrong with that especially if you end up selling far more of them than you would otherwise. This also incentivizes buying higher end bottles (with higher absolute margin but less by percentage) and maybe selling more wine altogether.
I definitely DON’T run a restaurant so I’m sure I’m missing some of the moving parts here. Does anyone know if there are restaurants that have similar models or why this wouldn’t work?
We do too; that is great for the waitstaff but not the restaurant. I really hate feeling we are taking advantage of a restaurant.
We had a BYO on Friday at Vaucluse in the City. They called mea couple of days before and asked if I was ok with a flat $200 fee for corkage and a semi dedicated sommelier. That worked really well. Also, many times the sommelier is on salary, and is not part of the tip pool, but works extramely hard on the wine service. This was the case on Friday, so we put together a cash tip at the end of the meal. We had a great experience, the sommelier joined in, and I think we all went away pretty happy.
Many do the kind of model you are describing, I think it’s misleading to say that all restaurant mark up on wine is either 3x or 4x bottle price across the board. I know people that anything that wholesales at $100 or above it’s a 2x or 2.5x mark up max.
Generally on the low end will be the higher mark up, mostly glass pour and for various reasons it’s generally 4x mark up if not 5. Factor in waste, customer return, employee over pour, employ/customer spill and that soaks up about 10% of that mark up…
Ideally a larger non wine destination restaurant shoots for the 75/25 rule, %75 of sales being food, %25 of the sales being liquor/beer/wine. Wine destination restaurants (that actually have a somm) shoot for more in the %35 or higher in beverage sales…coffee, tea, soda count for very little of the beverage sales maybe (again depending on the model %2-%3).
On the larger scale, using %25 beverage sales model, wine will be apx. %10 of that liquor %10 and beer %5, depending on your customer mix any of those can be swapped for another and it’s also seasonal. So all in all wine is a very small focus of what larger or non wine destination restaurants care about. Generally these restaurants have an assistant manager managing the list or the GM while they balance a bunch of other responsibilities besides wine. (That’s why you normally see many vintage errors or pricing errors in menus)
In a wine savvy restaurant with a somm, you can factor in an extra manager or person you have to pay to run the program, mid size restaurant groups (5-7 restaurants) have someone to do this but you have to factor in $50k + for someone to manage your program.
Let’s use a 2 million to 3.5 million size restaurant, I’ve helped run wine programs in these as well… you’re only looking at about $200k-$300k in wine sales, that equals about $800 in wine a night, averaging weekends and weeknights… back out about $250 of that or so for glass pours and you’re selling about $500-$550 in bottle sales a night, so about 10-12 bottles a night (on average)…
I know what I’ve typed out is very broad and there are a ton of scenarios that play out differently but as you can see when your average bottle sales a night are 10-12 bottles in a smaller restaurant it’s really one of the last things you’re concerned about. If you were to lower your margin you are hoping that you generate more bottle sales, but how many more? Again it’s only %10 of your sales so where is most of the attention going to go? On that 65-75 percent the food is generating, the wine mark up is just extra profit.
I hope this gives a clearer explanation of how it works and why in the end, unless you are a wine savvy restaurant the whole idea of mark ups is really inconsequential…
Just an antidotal story. We recently were in Hawaii on vacation. I know, generally a wasteland for wine. Found several restaurants with decent wine lists but the mark up, even for Hawaii, was stupid crazy. Many more than 4X retail. We never ordered a single bottle. We also discovered a restaurant that had the following printed at the start of the wine list, “We believe great food should be accompanied by a great bottle of wine. As such, we have priced our wines with this in mind.” There were many excellent wines to choose from at 2X retail. Many far less. We ate there 3 times ( it didn’t hurt the food was excellent) and ordered 2 bottles each meal. So my question is: Which restaurant made more money off of us as dinners? The ones with wine 4X retail or the one with wine 2X retail?
I feel like this is how this conversation has gone:
1: Restaurant mark-ups on wine are too high.
2: That’s because restaurants don’t sell a lot of it so they don’t make much money on it.
1: So lower the prices.
2: They can’t afford to do that. Restaurants already don’t make enough on wine sales. Imagine what lowering the price would do!
1: …