That’s what they want you to think. There is a restaurant in Pittsburgh, the Carlton, that is high end, has been in business forever, and is very famous for the $10 mark-ups on wine. Obviously, their philosophy has not been ‘bankrupty’ for them. And what about all of the restaurants that either don’t serve wine or booze at all, or only have basic low end stuff, and therefore by definition aren’t making huge sums of money from their wine. Somehow, they are all managing to stay in business no better or no worse than anyone else.[/quote]
While not exhorbitantly priced their wine list is far from a $10 over retail mark up. Not even close.
At the Carlton (web list):
Felsina:
Fontalloro: Carlton $99.99; web $45
Rancia: Carlton $89.99; web $42
CC Riserva $59.99; $25
Veuve Cliquot $95.99
Oddero Barolo 2006: Carlton $70.99; $45
Their prices are pretty fair, especially for PA. The usual PA markup is 3 to 4 times retail. The Carlton website claims a minimal markup on wine which is a fair claim given what the competition charges.
I can’t believe this is a factor. How many restaurants have less turnover (proportionately of course) than retailers like Zachys or Sherry-Lehmann with vastly more inventory who keep tons of SKUs in stock for years?
AND their artificially lower food prices on menu? to me the question to ask is why not change the mark ups and lower wine prices slightly and increase food prices. for many is all the same but for us wine guys allows us to drink better off their list…
The stock answer says it all. My experience at dozens of restaurants in Europe (except those in the nosebleed league) is that mark-ups are much closer to 1.33 - 2x retail. 3x - 4x is hideously common here in PA and my reaction is consistent. Somebody must be paying it, acceptably frequently, or it wouldn’t continue.
With all due respect to your brother in law, I just don’t see how this makes financial sense.
The return on a $100 investment should be the same as the return on a $50 investment? A fixed profit of ten bucks?
It has been my observation, over the course of over 25 years in the restaurant business, that chefs do not automatically have great aptitude in the numbers side of running a restaurant, just by virtue of being exec chefs.
I don’t know about you, but I wouldn’t be willing to tie up tens of thousands of dollars in inventory, for a return of $120 per case, provided I sell ALL the bottles, before they go bad, or someone drops them, or they get stolen.
To get back to the original point, I have a hard time paying more than 2 x retail for a bottle of wine with dinner, especially if I’m having more than one. I look for something inexpensive and drinkable, or I switch to beer, or a cocktail.
I’ll drink my gems at home.
Yeah, you can’t look at web prices of wines and compare that to PA. Our wines here have a pricing structure different than anywhere else in the US. After all, we are still paying for the 19th century flood in Johnstown.
I also look at the Lotus, where I can order wines off of their list at prices that for the most part actually pretty closely match retail.
Tom:
The Lotus of Siam is in Las Vegas. You can look at their wine list on line (just google them) and you’ll see an amazing list with amazing prices. I have heard rumors that there is one or two other fans of that particular restaurant on this BB, so you might find some other comments as well here.
When you move to town, please contact me. Having a baby precludes a lot of fancy dinners out, but we do make it out sometimes. Plus, there is an authentic Chinese place that loves our baby, so he is welcome there anytime, and it is BYOB as most places in town are.
The Carlton charges $46 for Banfi Rosa Regale (we sell that for $22) and $30 for Korbel (we sell for $10), so I don’t know where you’re getting that idea. Is it just certain wines? That is very different and lots of places do that.
In the end, any business has to take in more money than they pay out. Restaurants have two main sources of income, namely food and beverages. When faced with increasing costs, they have a choice to make. Raise the food prices, which are typically more heavily advertised and visible than alcohol prices, and see your customer base drop. Or they can raise drink prices, which may not have as big of a negative impact.
I’m not avoiding the subject of cutting costs, I’m just addressing the revenue side of things. Of course, there are always the few restaurants that charge as much as possible because they can. Restaurants like the French Laundry come to mind.
When I get the bill and see I spent more money on wine than food I just cringe. I don’t even order expensive bottles. It’s virtually impossible not to spend more money on wine than food. What this means is that wine drinkers are subsidizing the non-drinkers.
Are you saying Veuve Clicquot is $86 retail there? I’ve looked at some PA price lists before, and I didn’t see anything that would indicate this place is pricing the way you say they are.
Also, Lotus of Siam’s pricing is excellent, but it’s nowhere near as low as anything you’re talking about except for certain wines that are obviously there for the benefit of wine nerds who know what they cost (admittedly quite a few, but far from all, and largely at the higher end where there is more $ profit to be had with close to retail pricing).
Unless restaurants are EXORBITANTLY overpriced, food margins/profits are generally not that great for restaurants, They try to make for that on booze. Case closed.
I love reading these threads. What is the appropriate mark up for restaurants? What is the appropriate retail mark up? I will list some wines and I would like to see what the board would price them at on a restaurant wine list.
Veuve Yellow label
2002 Dom Perignon
Pepiere Muscadet Clos des Briords
Olivier Leflaive Puligny mont
1994 Ridge Monte Bello
2009 Kosta Browne SC pinot
SQN Syrah Labels
Baudry Chinon, Les Granges
Ch Rayas CnDP 2005
Santa Margherita PG
Rousseau Chambertin 2008
Dan - I expect retail to be ~30% over their cost. But that’s also market driven (local market mostly).
Restaurant? I have a problem with more than 2x retail. If retail is a 30% markup (or, if you want, 50% from wholesale) then we have this:
$30 wholesale cost
$45 retail
$90 restuarant. So the restaurant price is 2x retail, 3x wholesale. I’m sorry, but if a restaurant can’t work with that general formule, eh.
Now, I imagine a good restaurant will tweak t his - perhaps a higher markup on low-end wines and a relatively low one on pricey wines so that they develope a rep for good high end prices but still make decent actual dollars on the people who are on a budget (since the $10 wholsale wine would list for $30 and that’s not a lot of actual money).
But really, the answer to Jim’s question of why we pay what we do and that’s simple - because it’s what everyone charges and, while many of us can BYO, we can also find decent wines for reasonable prices and some places.
