Oh gawd not this again. Dumbass snooty somms can snoot all they want, but for me the issue is very simple: I know what I like and I simply cannot afford these wines at 4x retail on a list. So I either bring a wine and pay corkage or I order iced tea and the restaurant takes a big fat loss on my entire meal. I like Nero d’Avola and Xinomavro on the proverbial Tuesday night but not with my $100 Kobe filet or $50 truffle ravioli. I’ll take a great vintage Bordeaux classed or a 2004 Brunello THANK YOU VERY MUCH, but the hell if I’m paying $700 for the privilege.
Honestly I can’t believe anyone is dumb enough to pay these prices on their own dime. I’m sure 90% of these wines are bought by executives/lawyers on expense accounts and are just considered a cost of business. That makes me feel even less guilty about impoverishing the poor restaurant owner.
Randy,
The costs of serving a wine in a restaurant are very significantly greater than selling a bottle of wine in a shop.
You do not expect to pay the same for a piece of chicken in the supermarket as you do in a white table cloth restaurant. You will happily pay $40 in a restaurant and $4 in the supermarket. My goodness, that’s a 1000% mark up!
This subject has been brought up many times. I am a big believer in corkage as a privilege not a right and have given my reasons many times before. I actually thought it was a pretty good article, with a nice cross section of opinions. I did not care for it completely but cannot blame he author for a stupid (#12) comment by an “anonymous” poster. Living in California is a serious advantage when it comes to corkage policies and seeing how other areas handle the issue can be quite enlightening.
It’s funny considering how much time that person must’ve spent trawling around wine boards to create it. This is the sort of person who goes around with a chip on his shoulder, resenting the world, so sure of his views that all the evidence to the contrary is not processed. I nominate him Most Likely to be Living in His Mom’s Basement.
It’s always amazing to me that people who invest hundreds of thousands of dollars in a business often have no grasp of how to run it. Even some of the posts here ignore basic business math, instead divining some random thought out of thin air as a sound policy idea.
An interesting corrollary was this post which seems to imply that diners should be required to buy a beverage:
" Some people feel like it’s their right to come to a restaurant and only pay for food, but it’s important to understand that it’s a business. Yes, restaurants charge more than retail for wine, but retail doesn’t come to your house and serve the wine they don’t check the wine to make sure it’s sound." — Bernie Sun, Beverage Director, Jean Georges Restaurants"
What about when the diner brings their own glasses, does not require a decanter, and does the pouring themselves? I ask only because this is the usual situation when I BYO — heck, sometimes I’ll even bring my own corkscrew and open the bottle myself, too – in those instances, all the restaurant has to do with the wine service is tell me it’s o.k. for me to open the bottle and tell me it’s o.k. that I pour the wine myself.
I live in a state where corkage is illegal. (Thanks 3-tier assholes.) If you want to see what happens when restaurants have zero competition from wine-savvy consumers, come to New Mexico. The average restaurant has a piss poor wine selection and huge markups to boot.
The problem, I think, is that most restaurants are clustered around the center of the bell curve. They aren’t exceptional, but do what it takes to stay afloat. Having a shitty wine list at double or triple retail is part of the path to survival. I really don’t accept restaurants complaining about consumers bringing cheap grocery store wine when that’s what most of them do in the first place with a big markup.
But that in a nutshell is why corkage is a healthy part of dining culture. If a restaurant doesn’t grasp good wine or can’t/won’t to come up with a decent list, then the customer can fill the gap. If a restaurant actually takes the time to curate an eclectic, interesting wine list then they can charge what they want for the wine or corkage. I’m OK with that and respect it.
What it comes down to is the majority of restaurants serve wine that is the equivalent of frozen or canned foods at fresh food prices. I don’t go to a quality restaurant for food that I can get out of the freezer aisle at the supermarket. Why would I want wine from the wine aisle at the supermarket?
Well, Greg…in the case of a restaurant who has a full-service liquor license, BYOB is definitely illegal. But not because of the 3-tier a$$holes…not because of the distributors…who wield immense
power in NM. It’s because the restrauteurs want it that way. However, if the restaurant has a simple beer&wine license…that’s another matter. If you read the law when they enacted b&w licenses
(some 20 yrs ago) (you should have seen the restaurant wine lists before b&w licenses), it does not specifically prohibit BYOB. I’ve asked 3 different ABC directors about the legality of BYOB
for b&w. Two refused to reply. One stated it was definitely illegal. When I asked him to cite from the b&w law where that was stated…no reply. To get a definitive interpretation on the legality of
BYOB w/ b&w license, some b&w licensed restaurant would have to take the ABC to court. Why would any restaurant want to do that???..they are almost all opposed to BYOB. It would take
a very enlightened restrauteur to force that issue. I know of none who are.
There are actually a few (SantaFe) restaurants who work to have a decent wine list. Alas, the markups are often way too high (IMHO), usually 3X retail. And then there is Geronimos…using
about a 600% markup last time I checked. There are a few (SantaFe) restaurants who are around 2X retail and they have some decent wines that are of interest. I had a lovely EricSolomon/
Macedonia/Rikatsateli last night at Vinigarette that was slightly over 2X retail. But…you’re right…most NM wine lists are overpriced and suck in their selection. Which is sad…because
there are a lot of really good wines on (some) distributors lists (like Garegeist/Synergy/Fiasco).
Tom
Restaurants like to argue that customers shouldn’t complain about markups or high corkage because 1) high markups are the result of the costs of maintaining inventory/dedicated staff/service/glasses/etc., and 2) they can’t turn a profit without the high margins on alcohol.
But (1) and (2) are inherently contradictory: if the margins are really high in order to subsidize the food, then the wine-related costs can’t be much of an issue or the cross-subsidy wouldn’t work.
I think with the exception of a few places with really deep lists, it’s mostly (2). And they get away with it because 99% of the customers have no idea what wine costs and don’t know that the bottle on the list for $50 can be bought at retail for $16. It’s all about asymetric information. The people on this board are the few who actually know what wine costs.
Corey, you’re almost entirely right, I think. I think the answer is that the margins are so high that they both cover the costs of service AND generate proft. The beatuy of wine is it’s the best place, perhaps other than beer, for a restaurat to “hide” margin. The restaurant can’t hide margin in food, because I know what food costs - contrast that to the guy who sells, say, shirts; the cost of his raw materials are a blackbox to me. They also can’t “hide” margin in beer (commoditized, for the most part) or liquor (same), though in that case years of marketing by bars has socialized a margin on cocktails and beer that people generally won’t accept with respect to other products. That leaves wine, which is a total mystery for 90% of the diners (and is often made mysterious still by the selection of particularly obscure bottles for the list - I swear the Italian places in my neighborhood must sell nothing but the bin ends in the Winebow catolog). A restaurant can charge whatever it wants for wine without antagonizing diners, as long as there are a few bottles in the $35-45 range on the list, no matter how shitty they might be.
Um… In both cases the establisment buys wine. They store it. WHen someone wants to buy it, they grab a bottle and bring it to the customer. Now, in the case of the restaurant the server has to open the bottle… cough.
Before someone argues that a somm is a significant additional expense since they’re an employee dedicated to wine, a) many places do not have somms and b) all of the store’s employees are dedicated to wine. In fact, in a restaurant without a somm the server is only peripherally dedicated to wine… so that would mean the cost of serving wine is lower than that of ringing the purchase in a store, yes?
You do not expect to pay the same for a piece of chicken in the supermarket as you do in a white table cloth restaurant. You will happily pay $40 in a restaurant and $4 in the supermarket. My goodness, that’s a 1000% mark up!
Don’t be ridiculous. We don’t pay for a restaurant to bring us uncooked chicken and I wouldn’t pay anything close to $40 for any entree without significant additional prep and other, expensive ingredients. Food is worth the markup precisely because of the preparation which can be complex and involve several ingredients. Wine involves no prep aside from the ability to cut foil and remove a cork. As an actual example from the real world, Le Pichet, a good French place in downtown Seattle, charges $36 for a whole roast chicken or about 3X the cost of the good chicken retail.
I’m not in the restaurant business but I think that’s pretty typical for a restaurant’s food cost to be around 1/3 of the selling price (it’s probably higher for steak and lower for salad and pasta). Which of course shows hows ridiculous even a 3x wholesale markup on wine is – the food has the exact same markup but, as you point out, has significant labor cost inputs that wine doesn’t have. And at least here in NYC, 3x wholesale is a low markup, 3-4x retail is more common. Which is why I totally don’t buy the cost argument and instead favor the asymetric information/cross-subsidy theory.
That’s a big part of it, but don’t forget pure price discrimination. If there were an efficient way of charging higher income diners higher menu prices, the restaurant would do that. (Some businesses have a way of doing it: universities, for example, or clothing brands that ship some of their stuff to Saks 5th Avenue and some to Filene’s.) Well, there’s no efficient way for a restaurant to do that directly, but they can do it by proxy. Ordering wine in a restaurant is a pretty good proxy for being on the side of the income bell curve that can afford to pay higher prices. So, if you apply a higher markup to that item you’ve found a way of charging higher prices to people who are willing and able to pay them and lower prices to people who are not. All of the other reasons given for the markups are flimsy rationalizations.
Although I think restaurant markups on wine frequently are absurd (i.e., too high to justify my buying wine off the list), it is worth taking notice of the overhead differentials between a restaurant and a wine store when it comes just to storing inventory. Most larger wine stores can find a retail space where the per bottle costs of storing wine are relatively low, and the wine is often simply stacked up with boxes on top of boxes. A restaurant, by contrast, typically has to store its wine on premises, where the per bottle storage costs in the “wine cellar” greatly exceed those of a large wine retailer. Not enough to justify 3 times retail, but enough to justify something greater than retail…
Added to that, in some states volume purchases equal discounts, so retailers who place multi-case or even pallet orders see a lower per bottle price than a restaurant that buys maybe 1-5 cases of a particular wine.
1-5 CASES? A lot of restaurants (especially smaller ones) buy mixed broken cases of almost everything but the wines by the glass. This means full pop wholesale + broken case charges.
I’d also point out one major difference between restaurants and retail is that there is a significant limit to the volume of wine you are likely to sell a given customer during an interaction, as well as a fairly hard ceiling to how many customers you can interact with during a given seating. At a retail venue, one customer may come in and buy dozens (hell, hundreds) of bottles of wine at a time. In a restaurant, you are likely to sell (on average) perhaps one bottle of wine for every two customers. Yes, that retail customer may not return for a while, but there will be others like him/her, and there is no realistic hard limit on how many customers you can serve at retail.
In a restaurant, on the other hand, you are (depending on hours and size) limited to a set number of tables and a few turns. If you have a 200 seat restaurant, you are going to sell (assuming a “perfect” world where every table wants wine instead of beer, cocktails or soft drinks) 100 bottles per turn. The likelihood of attaining that kind of volume is virtually zero.
There’s also an artificial cap on each transaction. There’s only so much each table can spend on food. The only way to serious increase check average is via drinks, and, with every prom table or crowd of beer drinkers, you have to sell wine to make it up.
Lastly, in a retail environment, I can devote a few moments to a person looking for a single bottle and a while to someone looking to buy an assortment of mixed cases. Every table in a restaurant takes (roughly) the same amount of time regardless of how much or how expensive the wine they buy is.
Unfortunately for wine drinkers, wine is about the only part of a restaurant’s structure where high prices can be charged and guests might actually pay…
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