Restaurant Wine List Prices

[Capaneus]

This is something that's been a problem (and topic of ever-ongoing debate) for years here in Philadelphia. We have one of the worst wine-retail situations in the country, because the State govt. directly manages wine and liquor sales. Because of this, and because of a relatively stodgy restaurant scene, our markups have long been on the leading edge of industry practice. We bitched, we moaned, we went to NYC, we dined at home.

So now we have these things called BYOBs - restaurants that carry *no* wine or liquor. They're often the venue for new chefs when they're ready to strike out on their own. Because the price of a license ($75k in Philly), and the cost of wine inventory are a large part of the typical startup capital, it's a much less risky proposition for someone jumping into a notoriously merciless business, especially because they also tend to be on the informal, cute/homey end of the decor spectrum.

So now we have a wave of restaurants that we can bring wine to, and the Philly food scene is jumping, and I can afford the sort of experiences I never could with traditional restaurants.

As a side note, these things seem to often be run by husband-wife teams, don't know why.

My question is why there isn't a similar trend in NY. Granted, you don't have the problem with licensing and distribution, but reducing the startup price by the value of a wine cellar has to be appealing to some of the new young Turks. And NYC surely could support a few of them just on the strength of wine fanatics alone, I'd think?

And on an entirely other topic, the argument that "we make our profit on wine sales" brings me to a fast boil: why are wine drinkers being asked to subsidize other people's experience? It smacks of yet another backhanded "Sin Tax". As far as I'm concerned, restaurants can charge whatever they feel they have to. But now I have an alternative, and I'm using it. And you should hear old-line Philadelphia restaurateurs bleating sadly about it... Balm for my long-gouged heart.

Edited December 23, 2004 by Capaneus (log)

[Carolyn Tillie]

Alacarte - you are pretty close to correct. The profit margin on food can be as little as 3% to 5% so for a restaurant to stay in business, they HAVE to mark up the beverages. That is why something simple like Coca-Cola, at 02¢ a syrup splash is still $1.00 a glass. It isn't just alcohol...

There are a number of threads on this practice which I'm too lazy to link to right now.

I wish I could remember where I read this intriguing stat -- I think the NY Times, a few months ago:

On average, most restaurants mark up their wines three times the purchase price they pay.

If I recall this correctly, the context of the stat was in an article about Cru restaurant (NY), which marks up its wine list "only" twice the price they pay.

Not sure if this is a US practice or a global standard. I'll post a link if I can find the article again.

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[bobferdon]

I wish I could remember where I read this intriguing stat -- I think the NY Times, a few months ago:

On average, most restaurants mark up their wines three times the purchase price they pay.

If I recall this correctly, the context of the stat was in an article about Cru restaurant (NY), which marks up its wine list "only" twice the price they pay.

Not sure if this is a US practice or a global standard. I'll post a link if I can find the article again.

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I have done a few winelists over the years on the East Coast. Nothing like Mark's place. Their reputation is too good to ask for my help. That is why Mark is so important to them.

I have always used the 2 1/2 to 3 times the wholesale but it is tailored to the client base. I am not going to load up a restaurant that has put their trust in me with Burgundy if they can't sell it. If I do add some big wines to the list I will go with a "bottle Profit" markup rather then a percentage.

What many of you fail to realize is that most retail shop turn over what they buy in a few weeks or months.

A place like Citronelle many buy and store wines for years until the are ready to be paired with their selections on the menu. There is much more overhead.

Most important is you cannot deposit a markup in your bank account. You have to sell it to make a profit.

Here, it is a mix. Retailers and Restaurants generally pay the same. I do have wines I target to retail at deeper deals when possible and legal and I have wines I target to on-premise and better pricing.

[jgould]

I wish I could remember where I read this intriguing stat -- I think the NY Times, a few months ago:

On average, most restaurants mark up their wines three times the purchase price they pay.

If I recall this correctly, the context of the stat was in an article about Cru restaurant (NY), which marks up its wine list "only" twice the price they pay.

Not sure if this is a US practice or a global standard. I'll post a link if I can find the article again.

←

I have done a few winelists over the years on the East Coast. Nothing like Mark's place. Their reputation is too good to ask for my help. That is why Mark is so important to them.

I have always used the 2 1/2 to 3 times the wholesale but it is tailored to the client base. I am not going to load up a restaurant that has put their trust in me with Burgundy if they can't sell it. If I do add some big wines to the list I will go with a "bottle Profit" markup rather then a percentage.

What many of you fail to realize is that most retail shop turn over what they buy in a few weeks or months.

A place like Citronelle many buy and store wines for years until the are ready to be paired with their selections on the menu. There is much more overhead.

Most important is you cannot deposit a markup in your bank account. You have to sell it to make a profit.

Here, it is a mix. Retailers and Restaurants generally pay the same. I do have wines I target to retail at deeper deals when possible and legal and I have wines I target to on-premise and better pricing.

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all excellent points; therefore, a real-life example is needed for clarification & understanding:

assuming a retail store is offering a Morgon for $12, what wholesale price is the wine store paying? what wholesale price is a restaurant paying? on a typical wine list, that same Morgon is $35-40?????

& re: your above comment - it "appears" many, if not most, restaurants employ the 3-4x markup on RETAIL - vs. - your 2.5-3x wholesale markup?? totally agree re: length of inventory time, capital tie-up, etc; however, is their not some sanity required here??

Landmarc, a restaurant in the TriBeCa area of NYC, has staked its reputation on both its food (very good) AND amazingly reasonable markups on wine, that put to shame literally every single restaurant in over-restauranted city!!!

[joiei]

I'm sick and tired and I'm not going to take it anymore!!!

Fancy restaurant, Chicago IL - 2001 Santa Margherita Pinot Grigio - wine list price: $45.00 - Retail price: $14.99

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Here in Tulsa, that Santa Margherita goes for $22-23 in the wine shops.

And one serious offender to over priced wine lists is The Rivergrille in Bentonville, Arkansas. They feel they can do this because of all the Manufacturer's Rep dinners they do for the Wal-mart Corporation. The minimum mark-up the last time I was there was X3.

I know this is not your preferred format, but this is a serious offender in my book.

[bobferdon]

First off, 50 states, 50 different sets of regulations. What I used to be able to offer in DC would get me arrested in Maryland. You have to be very aware of where you are on Wisconsin Ave in case you cross into Chevy Chase...

It would be wrong for me to say who pays more because the laws are different everywhere.

In NJ multible case deals are allowed so a large retailer has an advantage but there are also buying co-ops which allow everyone to make the deal.

More and more here both on and off premise pay the same price. At least they are offered the same price. Many restaurants will only buy a few bottles at time to get cost down so they get hit with bottle charges from a distributor and they lose the full case discount.

In MD everything is a one case deal. Multiple case drops are not allowed. DC is a free for all where common sence prevails.

I don't know of too many restaurants that really want Santa Marg on their winelist. The retail price is so well known that it is harder to make a normal margin on it on-premise. But it is there because so many restaurants do not have staff trained to sell something better or more profitable.

PA is really tough. NJ is the king of the BYO's and I love it.

[jgould]

I I think the NY Times, a few months ago:

On average, most restaurants mark up their wines three times the purchase price they pay.

...Cru restaurant (NY), which marks up its wine list "only" twice the price they pay.

←

I have done a few winelists over the years on the East Coast.

I have always used the 2 1/2 to 3 times the wholesale but ...

←

all excellent points; therefore, a real-life example is needed for clarification & understanding:

assuming a retail store is offering a Morgon for $12, what wholesale price is the wine store paying? what wholesale price is a restaurant paying? on a typical wine list, that same Morgon is $35-40?????

& re: your above comment - it "appears" many, if not most, restaurants employ the 3-4x markup on RETAIL - vs. - your 2.5-3x wholesale markup?? totally agree re: length of inventory time, capital tie-up, etc; however, is their not some sanity required here??

Landmarc, a restaurant in the TriBeCa area of NYC, has staked its reputation on both its food (very good) AND amazingly reasonable markups on wine, that put to shame literally every single restaurant in over-restauranted city!!!

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quite frankly, the SM pinot grigio is ~$22-24 here in NYC!!! amazing, but true; therefore, paying ~$44 at a restaurant doesn't seem so terrible, although don't know the wholesale price.

the real question is how SM gets away with that retail price?? i don't believe SM's pinot grigio is in the same class as a grand cru pinot gris from alsace.

[*Deborah*]

Regarding jgould chain of mark up: I work in the 'fashion industry'.  Mark up goes like this: small factory in China produces a sweater but they need to pay an 'exporter' for the rights to ship, I'm a middle man (design/prod company), and I get a mark up for design, overseeing prod, shipping, I sell to a 'manufacturer' (say Liz Claiborne), who in turn sells it to a retailer (Saks).  So costing goes like this: $2.00 ex-fty, $3.00 ex-exporter, $6.00 ex-middleman, $15.00 ex-manufactuer = $45.00 at the retailer. That's pretty normal type of mark up structure.    Depressing...but, hey you asked!

THAT IS DEPRESSING BUT, still not as egregious as wine!! let's take a look:

grapes & growing $ 1.80

winemaking 2.20

packaging .92

marketing .60

sales & distri. 3.00

adminis. .60

winery profit 1.35 **

whlsale markup 4.56

retail markup 7.44

rest markup ~ 35.00

total P to customer $60.00 for a regular little CA cab from Napa

& that's NOT even considering a nice little bordeaux from the Medoc!!

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There's one thing that clothing retailers and restaurants do NOT have in common: sales. I seldom buy clothes at full price; I wait until the sale, that's just the reality of my financial situation and the way I was brought up. I think most people can appreciate a bargain. But with one exception I saw in this thread, I have never heard of wine specials that included a discount in a restaurant. Of course the clothes store's goal is to totally clear inventory periodically, while a cellar I assume should more slowly morph...On the other hand, some wines become more valuable over time, while last year's clothes will only depreciate.

I don't enjoy paying triple or more the retail on everyday kind of wine, I guess is the bottom line, and if I know two restaurants, one of which charges $80 for a nice bottle of Amarone (that I probably wouldn't buy to drink at home since my at-home consumption is pretty pedestrian), and the other of which changes $120 for the same bottle, there had better be a real difference in ambience and food quality for me to go to the second restaurant more than once.

[food junkie]

I think Brad hit the nail on the head last year when he recommended just paying the corkage and bringing your own. I find myself doing that more and more often these days, especially as our home inventory grows and matures. I know this doesn't justify the high prices charged at restauarants, but it's a reasonable alternative IMO.

[Brad Ballinger]

I think Brad hit the nail on the head last year when he recommended just paying the corkage and bringing your own.  I find myself doing that more and more often these days, especially as our home inventory grows and matures.  I know this doesn't justify the high prices charged at restauarants, but it's a reasonable alternative IMO.

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Of course, that's where BYO is legal (some states or municipalities do not allow it).

[food junkie]

I think Brad hit the nail on the head last year when he recommended just paying the corkage and bringing your own.  I find myself doing that more and more often these days, especially as our home inventory grows and matures.  I know this doesn't justify the high prices charged at restauarants, but it's a reasonable alternative IMO.

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Of course, that's where BYO is legal (some states or municipalities do not allow it).

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If it's not, you could just put the bottle in a paper bag...

[RobInAustin]

Re SM Pinot Grigio. Is even worse if you know the "back story" of the wine. Demand soared years ago long past the amount they could source, so they now get ALL their wine from Mezzacorona in bulk. You can buy Mezz. Pinot Grigio for $12=15 for a 1.75 Litre bottle. NOW try to justify a retail price point north of $20 for .750 bottle for the SAME EXACT WINE! Yet another "dirty little secret" of the wine trade...lol.

Cheers,

Rob

[jbonne]

Re SM Pinot Grigio. Is even worse if you know the "back story" of the wine. Demand soared years ago long past the amount they could source, so they now get ALL their wine from Mezzacorona in bulk. You can buy Mezz. Pinot Grigio for $12=15 for a 1.75 Litre bottle. NOW try to justify a retail price point north of $20 for .750 bottle for the SAME EXACT WINE!  Yet another "dirty little secret" of the wine trade...lol.

ouch. now THERE'S a story begging to be told. just sayin' ...

[jgould]

Re SM Pinot Grigio. Is even worse if you know the "back story" of the wine. Demand soared years ago long past the amount they could source, so they now get ALL their wine from Mezzacorona in bulk. You can buy Mezz. Pinot Grigio for $12=15 for a 1.75 Litre bottle. NOW try to justify a retail price point north of $20 for .750 bottle for the SAME EXACT WINE!  Yet another "dirty little secret" of the wine trade...lol.

ouch. now THERE'S a story begging to be told. just sayin' ...

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how many more tricks does the wine industry have up their sleeves? is this the same as restaurants telling their customers they make no money on their food?

[Rebel Rose]

At the risk of starting this whole conversation all over again, here's a new twist on an old complaint!

Wine Patrol Deputy Enlistment

Why do restaurants charge so much? Because they can, because everyone else does and because we let them.

Well, no more. The Wine Patrol is pleased to announce its Wine Patrol Approved List (WinePAL®) program. The Wine Patrol is now recruiting deputies. Deputies will have identification cards depicting the Wine Patrol logo and your status as a deputy. Deputies will also have cards they can leave in the restaurants that direct the wine buyers to the website where they can see the requirements for achieving the WinePAL certification. When dining at a fine restaurant, one with wine prices in the stratosphere, simply leave a card when you pay the bill.

They forgot to mention required equipment: a flip-open wallet and dark glasses.

Who's on board? I haven't checked out the certification requirements yet, but this could be the next fun thing since Vineyard Challenge.

[adrian1]

This is one of the most facinating topics since I, a recent member, have joined.

First of all, we must all understand that at the end of the year, after all expenses have been paid out, the average restaurant, can expect 4-6% profit.

When we buy clothes, cars, vacations, etc. we don't have any idea of what the product cost is to the vendors. So we don't complain...too much. Wine is quite different. We know exactly what it would have cost had we bought that bottle at a retailer which is why mark-ups are so controversial. I find that most restaurants, in similar categories, tend to have similar mark-ups. It sounds like a lot. But it's neccesary. There is, of course, always the greedy exception.

So I propose a shift of focus...

Let's go after the coffee sales. 8-20 cents per cup cost to the restaurant or coffee house. What do they charge per cup? They should be ashamed!!!

[RobinsonCuisine]

Landmarc, a restaurant in the TriBeCa area of NYC, has staked its reputation on both its food (very good) AND amazingly reasonable markups on wine, that put to shame literally every single restaurant in over-restauranted city!!!

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[JohnL]

This is one of the most facinating topics since I, a recent member, have joined.

First of all, we must all understand that at the end of the year, after all expenses have been paid out, the average restaurant, can expect 4-6% profit.

When we buy clothes, cars, vacations, etc. we don't have any idea of what the product cost is to the vendors. So we don't complain...too much. Wine is quite different. We know exactly what it would have cost had we bought that bottle at a retailer which is why mark-ups are so controversial. I find that most restaurants, in similar categories, tend to have similar mark-ups. It sounds like a lot. But it's neccesary. There is, of course, always the greedy exception.

So I propose a shift of focus...

Let's go after the coffee sales. 8-20 cents per cup cost to the restaurant or coffee house. What do they charge per cup? They should be ashamed!!!

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How about the "pasta police!"

I have had it with restaurants ripping off us hard working folks.

Wine markups?

Forget about it!--wine is a bargain---even by the glass.

How about ten to twenty dollars for a plate of simply sauced pasta!

Spaghetti costs probably fifty cents to a buck a pound wholesale--for the good stuff.

Tomatoes?--$2--for a large can of San Marzano.

What's goin on--why do we allow the local Spaghetti joint to gouge us?

And what's with five to ten bucks for a simple green salad--last I looked lettuce is pretty cheap even at wholesale and even at Whole Foods. And most places are not dressing your greens with Manni (I have seen those huge cans of industrial grade oil lurking in restaurant kitchens).

Don't give me that "cost of labor" crap either! --how much skilled labor goes into tossing lettuce in a vinagrette?

I have had it!

I am not eatin out anymore--Staying home and sulking isn't much fun but at least I am not gettin ripped off!!!!

[Rebel Rose]

Here's a really fun article on the Wine Patrol and WinePAL (Wine Patrol Approved Lists) by Mike Dunne at the Sacramento Bee. (Free registration may be required.)

Cutler is a veteran winemaker who teamed with other fun-loving Sonoma County wine professionals in 1986 to form the Wine Patrol, whose goal has been to remind the frequently self-obsessed wine trade that the first role of wine is to enhance the gathering of food and friends. They've had fun doing it. The group's most notorious stunt was to hijack the Napa Valley Wine Train, all in good humor but not without a point: Lighten up, folks. It's just wine.

In recent years, the Wine Patrol has been lying low, but Cutler began to call his 60 or so compatriots out of hiding when he came up against one wine list too many that tried to take unfair advantage of its captive clientele, principally by failing to offer any attractive wines at less than $30 a bottle. Not all diners can afford to spend $40 or $50 for a bottle of wine, the low end for good stuff in too many restaurants, argues Cutler.

Cutler, incidentally, doesn't stand to profit by persuading restaurateurs to add more attractively priced wines to their cellars. After 29 years in the business, he's still making wine, though he's spending more time these days on other matters, from the philanthropic (helping rebuild New Orleans one house at a time) to the entrepreneurial (promoting a rock concert in a Hawaiian volcano).

With business partner Rusty Staub, the former baseball great, Cutler makes wine under the cult brand Relentless Vineyards, sold almost exclusively by subscription. "The wine I make is not available for under $30. There's no way for me to make money here," says Cutler.

So far, the Wine Patrol has certified two restaurants - Captain Charlie's Reef Grill in Juno Beach, Fla., and Mendocino Cafe in Mendocino. The program, however, only got under way on St. Patrick's Day.

Cutler's Wine Patrol program asks only that restaurants offer 1 wine in each category under $30, that ideally 10% of the wine list be in that price category, and that there be reasonable limits on corkage fees.

[JohnL]

Nice article.

The approach they are taking is IMOP the only logical one re: this issue.

That is focusing on price range not profit.

Restaurants can and should offer some selections of good wines in the twenty to thirty dollar a bottle range.

Instead of obsessing about mark ups people should be looking at choice.

There are plenty of interesting wines out there that can be added to restaurant lists in the lower end of the price range.

Nice to see folks (Wine patrol) having some fun with wine--