I just read a very well thought out and researched story about restaurant prices being outlandish on Enobytes.com.
I get why many people think this way, with some actually doing research studies to support their theories. It’s costing more and more to buy wine at restaurants. what was once a $5 wine-by-the glass is now up to $8 or $9. Being in the wine business, and knowing the original price of the item before it leaves the winery, to then see a $14 retail bottle of wine on a wine list for almost $40 does seem insane on so many levels.
So, I took the time to comment, and before I was done I had completely convinced myself that the trend toward raising wine prices was a necessary evil.
I’m now sharing, because it’s worth sharing for your thoughts on this, too… Especially if you’re in the food service industry.
I wrote:
Very impressive story, Jeffrey.
Wine seems to be the single item that’s used to keep many of these establishments in business. By boycotting them, I wonder how many great restaurants we’ll be putting out of business, though. Having been a wine sales rep for years, I got a behind the scenes look at the hows and whys. Some item has to help pay the bills, and wine’s an obvious target.
I suppose that the restaurants could just increase everything evenhandedly across the board, but then the food prices would also continue to soar, and people would head for the door. Wine is an item that people can elect to have or not. That’s the primary reason for the target.
A great study would be to evaluate all the costs involved in operating a restaurant: rent/mortgage, equipment, payroll, taxes, food, all beverages, etc., and then determine their profit. (Ah, capitalism…) I’d love to see something like that to support that their overall profit margins are huge; and then it’s all because of the wine. With that knowledge, I might elect to pay a corkage fee.
Good help is hard to find, and with restaurants, in order to keep someone good, benefits (like now having to offer health insurance) are a necessity. Gone are the days of minimum wage for wait servers, if you have a fine dining establishment. Minimum wage does NOT foster wait serving professionalism… With their increase in wine costs, perhaps “health insurance for all” has driven this new increase?
Just thoughts to ponder, having been behind the scenes as a wine rep.
I think one reason why people recoil at restaurant wine prices is that they often know how much the retail price is. They see that the restauranteur has not done anything with that bottle except to open it and pour it into a glass, and they have (in many cases) tripled that retail price. Which is not the same as cooking a meal, which requires personal attention and a shelf-load of ingredients. So yes, I agree: restaurant wine prices are outrageous, at that level. Nobody minds decent profits, but $40 for a $14 bottle is “loco.”
Restautants have been marking up wines the way they do along time before those same restaurants had to up the wages and insurance. So that does not wash.
Yes there is a big difference in the fact the a restaurant has to actually do something to the food and not much to the wine or liquor for that matter.
Perhaps some folks do not remember when fine restaurants actually used to carefully pick wine and cellar it till it was ready for drinking. Cellaring IS an investment, particulary if the restaurant has the proper storage area for it. Then it is understandable to mark up a wine that is cared for and is part of a wonderfull collection that is designed to match, at least in some ways the food and the philosopy of the owner.
Otherwise it does not make sense, at least to me, to mark up wines and liquors like they do. People really go out to eat for…..The Food.
Yes, I have been in the wine business and also in the food business before that.
Restaurant wine prices are totally out of control. I agree that I have seen 16 dollar wines listed for 40 dollars. If I owned a restaurant I would mark up the wine no more than 5 dollars over retail. I would want all my customers enjoying wine with their meals. My wine distributer would be very busy. As it is now I will not buy wine while dining as I am a good consumer, not a sucker.
I partially agree with both of you, that mark ups have can be crazy. But where I think they have gone crazy are at places where their “wine list” is just something that they gave their wine rep from a big gun to. They put that sales rep in charge of choosing those wines, creating and updating the list, because they do not have the time to do it. I guess that is okay, but, when I am paying 3 to 4 times mark up (in the buiz too) for something that EVERYONE has – its ridiculous. You can tell by the selection when they put time and money (actually pay someone whether its a consultant or ft sommelier) into the list. Then I do not mind – it then is about the experience that goes with it (was on that side of the equation as well). You get more than a bottle opened at your table, but a story or facts to go with; an opinion on food pairing, etc.. From being on restaurant side for awhile, I put tons of time, research and effort into that list. The one main reason going to a table was to make an experience for the customer and find something that fits THEIR needs. I had many people come in and order the wine first, then choose the food accordingly.
Yes, we go out for food, but as a foodie and wine lover, I look forward to a beautiful mean with a beautiful wine. I appreciate and am willing to pay for that. I refuse to pay for something that I can buy at any retail shop (especially grocery store).
So, I think the mark up issue really depends on the place, the wine and the people.
I agree with both that restaurant mark ups have gone wacky, but its the type of establishment that makes the difference. A place with a dedicated wine person, who actually puts time into the program, from choosing the product, to the list itself, to the glassware, training staff, creating an experience for the guest – I do not mind the mark up- especially when they make it a dining experience, rememberable. Because at those places, you will find something special, not your run of the mill wine. Moderation is key.
Where it is wrong, is a place whose list is compiled from a wine rep of a big distributor. The restaurant gives them the leeway to “create” the list, format it and update it – choosing wine from their portfolio only to line their pockets. Not only does that rep not have a feel for the customers, nor rarely is able to train the staff but their wines can be found at ANY retail store, bought online, etc.. In those places, its just to churn a buck – not about the customers.
Currently being on the distributor side, and formerly on the sommelier side. As a sommelier, I put so much time, energy and effort into finding wines, creating the list (reprinting weekly), food pairings, staff training and never mind the care of the cellar. I was lucky to work for a place that had a beautiful, cellar that I enjoyed spending time in. I had some wines that were readily available, as you need to, I never liked to mark those wines at more than double retail. The program made their money on other wines, which you couldn’t go around the corner to or next door to the other restaurant, etc..
Not everyplace can have that I realize. As a foodie and wine lover, I go out for both – food and wine and the experience that they both bring to my palate. When dining out and not searching for that experience, I tend not to order wine. Its just not worth it, like you said. Or, I go with the corkage fee.
Until I’ve owned a restaurant, Steve, I cannot image the costs. I do, however, own a PR agency, and I’m all to familiar with how having employees can make an owner constantly looking for loans to make payroll.
Again, Kelly, it’s easy for us to judge; however white table cloth establishments can barely make it, given the costs of keeping an establishment open. And yes, it does depend “on the place, the wine and the people,: along with what the owners’ costs are to keep the doors open. Good point on the staff member choosing, too. Sommeliers are wine pros and don’t work for peanuts…
You think restaurants make money with the food? Nah. The Bar is the profit center, which includes wine, so expect to see the status quo continue. There are a few exceptions to this–one trend is “half-price” night, where you can order any wine on the list at half-off.
Many of the comments and original article make valid points, although anyone who expects a bottle of wine with only a $5 markup is totally unrealistic. I come from a restaurant family and understand some of their views on costing and pricing. Long ago I had the opportunity to redo the entire mixed drink and wine list pricing for a posh Connecticut Avenue restaurant in Washington, DC. In that day the bar and wine cellar was expected to pay the rent and some of the overhaeds to keep food prices in line with compettiton in lessor restaurants which didn’t quite offer the same level of services. Anyone who today looked at the actual mark-ups on coffee or iced tea for example would be more alarmed than about the much lower markups on wine.
All that said, I also believe many restaurants are missing an opportunity to sell far lerger volumes of wine than they do today – and I say this as today working part-time to sell wines in a retail establishment where I generally know wine’s wholesale costs and retail prices. When I visit restaurants I immediately grab the wine list to determine what I’d enjoy and have noticed that restuarants that appear to be doing substantially more volume in wine sales generally markup every day wines, not older vintages stored in their cellars, at about two times or less than wholesale. Others which try for three or more times wholesale or worse three times retail seem to fare worse in volume of sales.
What is the “right” markup, I can’t answer for a specific reataurant. However, my son-in-law was executive chef at a small Italian specilaty restaurant in a hotel across the street from the World Bank and, hence, entertained many visitors from Eurpoean countries who bitterly complained about the restaurant’s wine list prices. He decided to try an experiment with the wine list. He reduced the markup from three times retail to two and one half times or less than wholesale cost for their entire wine list and became much more selective in adding a larger number of lower cost quality wines that offered good value. Wine sales volume more than doubled.
Next he decided to expand the experiment on a line of quality wines produced by a small Maryland winery where he knew the owners. He marked these up at one and one-half wholesale and featured them by the glass at both the separate bar and on the dining wine list. He estimated each month’s sales in order and adequate quantity to cover a month’s needs. He never quite got it right as the wines’ sales soared and he found himself ordering to replenish stock after about two or three weeks. He estimated the siginicantly increased volumes in sales more than almost doubled their former profits on wine sales over about a two year period. There was one downside, now more profitable cocktail sales in the bar dropped off as more people began ordering different wines to drink and sample by the glass. Since he was a stickler about food and beverage costs and served to turn around several unprofitable restaurants, I suspect his numbers were accurate.
If nothing else, maybe he helped people from over imbibing in higher alchol beverages in a city known for its sometimes over consumption.
Les, you’ve certainly given us all a lot of valuable insight. Restaurateurs, take note.
Great idea, David.
i buy and price for a few restaurants.
>>
oh, people, it’s a game. but… YOU’re the star!
stay home, or don’t complain about the theatre. you are the actors. we are the stagehands. we’re just trying to make you look fancy and classy and educated and rich and strong and knowledgeable and whatever you need… and yep, we’ll even let you treat us like servant-slaves to impress a client or fiance.
do you like wine? cool. i’ve got the good stuff.
on a budget? you should bring your own. no worries.
what we do is called “hospitality”, and some do it better than others.
it is reasonable to expect that careful attention to quality costs money.
here’s the deal:
i’m good at what i do. bring your own swill, or pay me for what i’m good at.
if i can’t have your respect, i’ll take a moderate corkage.
enjoy your meal.
Bravo, John…
Reading through the comments here I noticed a lack of input from those who stock and maintain restaurant cellars. I am curious about how much of the wine that is purchased and stocked is actually sold and how much ends up sitting on a shelf costing the establishment space and money. How does a restauranteur or sommelier manage to pair their wine purchases with projections of quality, style, and quantity that potential customers might buy. The price of the bottles actually sold must support the entire quantity of wines purchased to complete a restaurant’s portfolio, oftentimes so a client can feel that the wine list has a “decent” selection from which to chose a single bottle of wine. Anyone have information as to what percentage of wine has what kind of turnover?