Wine Markups in NYC

[chefzadi]

I know that each of these restaurants sells a lot of wine at a wide range of price points, and I'd guess that they probably sell more wine than most of their competitors.  In the end, the common denominator seems to me to be a staff who can impart their enthusiasm for and knowledge of wine to their customers, and having a balanced list that allows customers to find something worth drinking whether they're on a  $50 or a $500 wine budget.

It's a good model for business and alot of factors go into achieving this. I prefer this no matter which side I'm on as a diner or industry professional.

Too many supposedly "high end" restaurants charge high markups, yet offer too little in terms of service or selection.

Unfortunate from the point of view of some consumers, but wine selections take time to develop. The first year or so a restaurant is more focused on perfecting the food. When you're talking about very expensive wines paired with exceptional food many of the qualities are balanced on a pin head. Oddly enough though there is an ocean of opinions as to what should be on that tiny space.

After the cold reception I received at Jean-Georges the one time I brought a bottle (a bottle of 1975 Pichon Lalande that had special significance to me as it was a gift from the winemaker's cave), I decided not to bother again. It also made me wonder why they even bother offering their $75 corkage if they're going to get their panties in a wad when people actually pay it.

Unfortunate again. They seem to be offering it as an obligatory gesture that they grudgingly make motions in actualizing. Not a good policy. And if they were rude to you, it's also their way of telling you not to do it again. Apparently you understood.

The most important piece of the puzzle is having a truly knowledgeable sommelier who will spend time with customers helping them select the right bottle for their budget and meal.  Another factor is creating a list with interesting selections at all price points.  All too often, I see lists with plenty of interesting bottles at the top, and nothing but plonk at the bottom.  It's almost as if they want to punish customers who can't or won't spend $100 or more a bottle.  There are plenty of great inexpensive yet interesting wines made today, so there's no excuse for any restaurant with high aspirations to force mediocre wines on the lower end customers.

Agreed. You make alot of good points.

But the 3-4 markup isn't going to change. It accelerates return on investment and generates profits for investors. Over the years I've worked at a few places that on the surface seemed hugely successful, but the slow return on initial investment made it tempting for some investors to cash out. I've also met a few chefs and owners who don't add this into the equation, sort of like "even if the place were packed to capacity, with maximum turns, how long will it take to get a full return on investment? Is it preferable to just let the money earn interest in a bank?" Seems so obvious. Anyway, the markup for 2 peas on a big plate should include this.

[slkinsey]

So, if you buy a typical "fancy restaurant" vodka martini (around 5 ounces), the liquor cost is $5 to the house. That 5 dollars has to pay for the glass, the napkin, the bartender and barbacks, the glass washer, the ice machine, etc.  If they sell this drink at the typical 15 bucks, they're running the drink at 33% liquor cost.  My friends in the business tell me that this is ultimately a money loser for the house.

I don't know of any fancy restaurant that pours anything near 5 ounces of vodka into a martini, there is very little vermouth. I think that would wipe out their customers, before they even start their meals. It would contain the alcohol equivalent of two thirds of a bottle of wine. The total volume of a martini, I don't know how large it is, contains some ice melt. I think that even 2.5 ounces of vodka plus vermouth would be generous. I'm sure that some of our bartenders could clarify this further. I do think that the economics will work out just fine.

Marcus, who do you think I'm getting this information from? The average restaurant Martini glass runs to something like six or seven ounces. That means four to five ounces of spirit plus maybe an ounce and a half of water from melting ice at 25% dilution -- and believe me, plenty of places go bigger than that. This is actually a terrible way to serve a cocktail (it becomes warm long before it can be finished), but customers would feel "cheated" if they were handed a three ounce Martini so restaurants have to serve double-size drinks. At Bemelmans, Audrey Saunders served Martinis in a small glass with half of the drink decanted into a little glass carafe sitting in a bowl of ice on the side so at least the drink would stay cold. There is just no way a restaurant can get away with serving a 3 ounce Martini.

You would be shocked, I think, at the size of the Martinis most restaurants are serving. Fat Guy and I had dinner at Ben Benson's steakhouse one night and were served what must have been ten ounce Martinis. Steven's glass had something like 5 olives in it, which wouldn't leave much room for booze in a reasonably sized cocktail glass -- yet they hardly made an impact in the birdbaths they were using as glasses.

This is also why I think a lot of chefs tend to be somewhat anti-cocktail. Cocktails have become so large that you really do tend to get a little drunk before your meal. Back in the day, a cocktail was served in somethig like a three ounce glass. A Martini would have been an ounce of gin, an ounce of vermouth and a dash of orange bitters -- a bracingly cold aperitif that stimulated the appetite, not a palate-deadening, mind-fogging, lukewarm alcohol bomb. I love to have a cocktail before dinner, but rarely order them at restaurants for this very reason.

To further illustrate the point. . . at home I use mostly the Libby 8454 "Citation" cocktail glass. It holds four and a half ounces. It would be considered ridiculously small for a Martini glass in most restaurants. I scale my recipes for three ounces of ingredients, and by the time I finish shaking/stirring the drink it fills the glass. So when I say that "2.5 ounces of vodka plus vermouth" doesn't even come close to describing the standard restaurant Martini, I know whereof I speak (most restaurant Martinis don't include enough vermouth to even consider figuring that amount into the formula). 2.5 ounces of liquor would equal about a 3.25 ounce cocktail pour. No way would a restaurant sell that. I wish the standard restaurant Martini had only 2.5 ounces of -- well, gin rather than vodka.

As I read Sam, and admittedly it's not entirely clear in my mind, he's figuring the "liquor cost" as the cost of gin + "the glass, the napkin, the bartender and barbacks, the glass washer, the ice machine, etc." He's saying the cost is everything that can be applied to the cost of selling the booze and eliminating the cost of general overhead such as rent, lighting, etc. So we get a price to the consumer of three times cost to the restaurant.

I'm sorry if I was unclear. "Liquor cost" means the same thing as "food cost." It's the cost of the ingredients to the bar, aka the liquor. Just like with restaurants and food, however, when you buy a drink at a bar you're not just paying for the ingredients in the glass. You're paying for the guy who mixed the drink, the guy who hauled the bottles up from storage, the cost of the glassware, the cost of the napkins, the cost of the ice machine that makes the ice, etc., etc., etc. All these things necessarily figure in to the overall cost of the drink to the bar, and all these things have to be considered when the bar is figuring out what they will charge for the drink. I have a friend who is getting ready to open a bar, and is spending an incredible amount of time pouring over spreadsheets to figure all these things out. I am given to understand that it's fairly standard for bars that are making money to run at around 25% liquor cost (which is a genteel way of saying "400% markup") on average -- some drinks will be well below this, and some will be well above. But this doesn't mean that the bar is making a 400% profit on average. the ancillary costs are higher than the ingredient costs.

At the same time, when we're talking about wine, we're talking cost of purchase. What happens when you add on the ancillary costs you add on for a cocktail. Wine glasses are usually more fragile than bar glasses in any given restaurant. Wines are often stored for a much longer time than gin and need far more care and special conditions. We start to head back to one the original concerns. These ancillary costs run far more in the luxury restaurants with sommelier(s), temperature and humidty controlled storage, superfine glasses, etc. There's a reason to accept a higher markup from one restaurant than from another, if your profiting from those extra costs incurred by the restaurant.

Exactly, Bux. The ancillary costs are always going to be there. While I think it's likely true that many restaurants make more profit on alcohol than they do on food, it's not so simple. Especially with wines, there is the question of when/how/at what price certain wines were acquired, how they are maintained, what you're paying your wine staff, what kind of glassware you use, etc. -- just as you say. This is why I think, as I have remarked above, that it's easier for a restaurant in the middle range to adjust the cost model than it is for higher end restaurants to do the same. The percentage profit is likely much higher on the food for the middle range place, and they have no where near the same kinds of ancillary costs associated with the wine program.

[RobinsonCuisine]

"I was never visited by a sommelier,......"

I cannot imagine not going to a table that had requested my advice. At the same time, the offer of unsolicited advice can be met with a chilly reception and work against you.

Give the sommelier parameters, i.e. red or white, likes, dislikes, budget (if this is a concern (and there is nothing wrong with that and don't say "reasonable" when talking price, thats too subjective, give a price range)). I ask these questions if they aren't offered. The answers I receive give me a profile of the customer and I base my suggestions from there--safe, unadventurous--open, willing to try something new--clueless, suspicious--experienced--cheap (dripping in jewels and furs and complaining about the high prices while ordering the most inexpensive bottle on the list ($25-$30)and then complaining that it doesn't taste like the priciest ($300+). It won't. Its not supposed too.).

I always point out the choice that comes closest to the description of the wine regardless of the price, but then offer several other choices that will work within the cost structure. If there is no clear consensus in regard to variety or region, I may make suggestions that are no where near what was originally requested but which I feel work with the food. My job is to insure that the wines on my list are quality regardless of the price and compliment the menu.

And I agree with an earlier poster who said that lower prices do not always mean higher sales. Quality and variety insure sales and return customers.