Jul 112010

Recently I was reading an article on our slow to rebound economy. The writer interviewed an upscale restaurateur who claimed his sales were still off by 60% from a couple of years ago. I have no idea where the restaurant is but that doesn’t seem to be the case in my two cities, Denver, CO and my beloved Austin, TX.

Donna and I spent a little time discussing the restaurateurs claim and agreed that we don’t eat out as much as we did. So we asked why? We came to the conclusion that there are a number of restaurants we like very much but refuse to pay their exorbitant wine mark ups. In my early days of wine collecting (that was a long time ago) in Austin I’ll admit I was spoiled (Henry and Jay, you know who you are). Back then wholesale laws and enforcement were much more lax and I’d buy cases of great wine wholesale, compliments of my restaurant buddies. So very early on I learned the real cost of wine.

Here’s my rant. What the hell am I getting when I pay a restaurant 200% or more than I can buy the exact same wine retail. Sure there is service and ambience and I understand that. But I get the same service and ambience when I buy a $15 dollar bottle for $30 as when I buy a $50 bottle for $100. What do I get for my extra $35 in mark-up? Now add another 20% in tip to that and your $50 wine has cost you $120. Recently I was in a wine bar that offered us a glass of one of our favorite upscale Carneros Chardonnays for $21 or the bottle for $70. I paid $29.99 for the same bottle retail two days before. Give me a break.

I understand that large liquor stores that make big orders pay a bit less that a restaurant or bar that might buy a case or two but sometimes the mark-ups are just plain greedy. The chef who is preparing my meal is like the winemaker, an artist. I hope that the chef will prepare a meal that is better than what I can make at home or at least different. I’m willing to pay for that art. But the restaurant has done nothing to enhance the flavor of the wine. In the example above I’ve paid $70 in mark-up and tip. That’s the price of two or three entrees. The artist (winemaker) is getting none of the mark-up.

What to do. The first thing is to pay attention. Sometimes there are some pretty good deals to be found. One restaurant we frequent has a very healthy markup on their biggest selling and least expensive wines. But as you go up the list the mark-ups become much more reasonable. If you are going to buy 4-5 wines by the glass, there may be a higher end bottle that’s a much better deal. Look for specials. The same restaurant mentioned above has weekend bottle specials that run $40-$70 but are within 10% of retail.

Wine bars often have special nights for discounts. One bar we frequent has big bottle night on Wednesdays. Wines are served by the glass at a near retail price. Look for ½ price bottle nights, usually early in the week or Sundays.  A local steak house we like will sometimes get a special deal on big cabs that run around $100 a bottle but will sell the bottles at retail. I know it’s expensive but it’s a good deal for a special occasion.

Here’s the best idea, negotiate. Yes, politely negotiate. I do it all the time and it usually works, especially when wines are marked up excessively. You have to know what you are talking about and it helps if you are a frequent customer.  Your chances of success increase when you choose a wine that is not a big seller. The restaurant knows they will sell common brand wines like crazy no matter what. Choose an interesting wine and put your negotiation skills to the test. One last tip, you can always look up the retail price of a wine on your smart phone to give yourself a little negotiating ammunition or to check how good that “special deal” really is.

  18 Responses to “Why High Restaurant Wine Prices?”

  1. I agree with the sentiments about the huge mark-up on wines. I live in Canada and the prices are even higher because of the huge tax and tariff on wines and liquor in general. A bottle of wine like the Robert Mondavi Meritage Private Selection that sells for $7.99 in the US (Fred Myers in CA) costs $18 in Canada and then $36-45 at a restaurant.

    I attended a seminar a few years ago sponsored by American Express. The speaker was a well known consultant (can’t remember his name) who showed that restaurants that have reasonable mark-ups and have innovative wine menus make far more than restaurants that charge the huge mark-ups. This is because they sell more.

    I feel that wine and food go hand-in-hand and feel insulted that I have to drink down when I go out for a restaurant meal.

  2. Great blog. I get frustrated with unreasonable margins on wine. Lucky for me that my favorite restaurant at home treats us well but most do not. Profit is not a dirty word but gouging is. You can only butcher a cow once but you can milk it twice a day.

    • I’m with you, Dan. I was in one of my favorite wine bars last night discussing this topic. While their mark ups are reasonable by wine bar standards, the Mgr was telling me that they now carry very few of the commonly known brands (ones you can find at the grocery store) so their savvy patrons are less likely to know the liquor store price. This result is a bettter wine list and fewer complaints about higher markups. I still refuse to pay more for wine markup than I pay for food that the kitchen actually prepared on the spot. You can always check the retail price on your smart phone.

  3. It’s posts like this that keep me coming back and checking this site regularly, thanks for the info!

  4. Great site. A lot of useful information here. I’m sending it to some friends!

  5. Thanks… I’ll keep you in mind when the weather cools off and shipping is less risky.

    Good Luck to you!


  6. As a small producer :}, we do ship direct to the consumer, but do not ship to wine retailers. We have only recently begun to sell to a few restaurants in California, Florida and NY.

  7. Yes, a good idea. I mentioned in the article a couple of wine bars and restautants we frequent that have 1/2 off bottle nights early in the week.

    BTW I enjoyed your website. Are your wines available in CO?



  8. Arizona prohibits it also, but I know that the wine organizations are lobbying to change these policies.

    I am not sure if you have a local group of people to support it…but here is something you may be able to do. Create a “wine club” that is a traveling club that frequents certain restaurants with nice lists. If your club has 50 plus members, you can ask for a reduction of wine prices for your group based. If your membership dines out, you can suggest that certain days which are not as busy (Mondays, Tuesday) are the days where they could use “regular” business. It could be a win win for wineauxs.

    Just a thought.

  9. Roger,

    There are many restaurants that have continued to operate as if we were in the days of abundance. Those places, also cater to a crowd who may not care about the cost of wine. They are paying for a total package…food wine and emotion. The exclusive venues are controlling their traffic to accomodate the patrons who can support the concept of the business. Those who wish to bring in traffic and fill the house with customers are adjusting their format to include small plates and wine specials and happy hours. Whatever format the restaurant chooses, the patron still has options.

    One little tip you can suggest to your reader is to bring their own wine. Corkage policies nationwide range from $5 to $50. You can call before you dine to see what the conditions are. The more exclusive restaurants may not permit that you bring a wine that is on their list. We suggest that you get the list prior to going out. This way, you can have your special wine with dinner without big markups in some of the sought after establishments.

    Some Temecula restaurants have a “zero” corkage policy for patrons who bring in wine from the local wineries. Every wine region has some kind of reciprocity, but nothing is carved in stone. After all, restaurants make money on wine..and they should.

    I am not sure it is fair to compare the cost of a wine at a local store verses the restaurant. The restaurant is stocking it, storing it and serving it to you. And, if it is not to your liking, will not force you to pay for it. Their mark up is not based on a true cost that anyone knows, as in most cases, the restaurant pays a distributor (which is sometimes mandated by the states).

    One thing that I have learned, is that the restaurant wine steward or sommelier has the experience and knowledge to discuss a wine which you may not know. Much of his salary is included in the cost of each bottle…and that does have a value, especially to those wineries with limited distribution.

    I hope this is helpful to your readers.

    • Christina…

      Thanks for you note. Of course I’m all for restaurants like any other business to be profitable. My comments are based on what I see as an often exorbitant mark-up. I do think it is fair to compare the prices offered at a restaurant vs. a wine shop because as a consumer I do have the choice to consume that bottle at home for one price or pay a higher price when I am out. The wine is the wine. I find it frustrating when a wine mark-up alone exceeds my entrée price. I feel like I’m getting a lot more for my money with the meal.
      As for corkage fees, yes a good idea…interestingly enough they are illegal in Colorado, where I live. The law states you cannot bring a bottle of alcohol into any establishment with a liquor license. It was only a couple of years ago that the law changed to allow you to take away an open wine bottle from a restaurant. Colorado is not terribly progressive when it comes to liquor laws.

  10. I appreciated this blog post and share the same sentiments! What I like in Houston right now and I am sure everywhere across the country are the places now allowing you to bring your own wine for a small corkage fee!

    • As for corkage fees, yes a good idea…interestingly enough they are illegal in Colorado, where I live. The law states you cannot bring a bottle of alcohol into any establishment with a liquor license. It was only a couple of years ago that the law changed to allow you to take away an open wine bottle from a restaurant. Colorado is not terribly progressive when it comes to liquor laws.

  11. Roger, I totally agree. As I become more aware of wine and prices, I have begun to order less wine in restaurants unless I know the mark-up is reasonable. In fact, this past weekend, we were at a place in the Hamptons and a bottle which I know in stores to be about $35 was priced at $48. I jumped on it. That to me, was a fair mark-up and one that makes me feel the service included and overhead involved are justified. Love the smart phone tip – definitely going to do that more often!

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