Restaurant wine pricing, is there anything more aggravating than paying $40 for a bottle of wine you could pick up at the local liquor store about $15? It really doesn’t seem all that fair and as a consumer you’re certainly obliged to feel like you’ve been taken to the cleaners. You’ve heard the arguments that you’re paying for the service, the experience or even the ambiance and they sound like excuses to you, but hold on a minute, maybe there is a bit of truth to that.
Let me start by saying I’m not a wine expert, I am an expert in the business of food & beverage. I love a good bottle, especially with a meal. I’ve tasted through some of the best portfolios of the biggest distributors and rubbed elbows with little known winemakers and winery owners looking for placements on my list. I’ve written and implemented wine lists for restaurants and hotels, hosted and cooked close to a hundred winemaker events and I am intimately familiar with the way a restaurant decides upon the price you pay for a bottle of wine.
The truth is, most restaurants would shut the doors without this type of pricing on their wine, and it is the restaurants greatest source of profit, liquor to a certain extent and food least of all. Without boring you to death with all the expenses a restaurant owner faces, it is the wine sales that pay the bills, that keep the door open to your favorite restaurant. Restaurant owners are well aware of the fact that customers today are savvier (I wasn’t sure that was a word, but Microsoft spellchecker says it is…) and well informed thanks to the internet, the Food Network and 1001 wine magazines. They know you are most likely familiar with the retail price of the wine you are drinking.
The problem for owners is that margins on food are very slim. Some dishes take hours to prepare, put together by people making an hourly wage, all of which is considered when deciding on a sale price of that entree. Most upscale restaurants with an average wine list don’t have the capacity to do a banging bar business as margins on liquor are both decent and fair, so wine becomes the safety net. Without the profit from that bottle of wine, it is harder for a restaurant to remain in business making your favorite (insert your favorite restaurant dish here) and supply the level of service you enjoy. But to be fair to the consumer as well, restaurants that employ this type of pricing need to be providing you with the meal, service and ambiance to earn that sale.
Many restaurants are adopting a new policy of $15 over wholesale. This, in theory, is a great concept for busy restaurants doing high volume, the type of place where sellouts occur regularly. But for the average eatery with a slower midweek and fairly strong weekend, it becomes much harder.
Many times the wines do justify a hefty price tag. Sommeliers and owners are constantly trying to find unique, small production wines to add depth to their list. These wines which can’t be found in any liquor store or internet market place do have steep wholesale costs sometimes. Those wines that require special storage and service methods incur a cost to the business as well.
Restaurants do need to be fair by utilizing a common sliding scale in their pricing. If you’re paying $30 for a $10 cost (wholesale) wine, that doesn’t mean you should be paying $300 for a $100 unless the special circumstances mentioned above apply. Most restaurants slide the scale back with higher end bottles. So if the $30 bottle is at 300%, the $100 bottle may be around $160, a 60% markup.
To be a successful restaurant you have to find that sweet-spot between gouging the customer and losing your shirt. Customers likewise should understand that you have that favorite place to go to again and again because the price on that bottle of wine pays for all you experience on your night out.
If you really want to be pissed, do some research on the markup of that Starbucks mocha frappe latte skinny coffee you’re drinking.