Restaurant Markups

Ed wrote on Wed, 19 Apr 2006 16:47:16 GMT:

??>> Hello, All! ??>>

??>> I know this is a perennial topic but things do change from ??>> time to time. Anyway, I wonder what is the prevalent price ??>> for a bottle of wine in a restaurant these days; twice the ??>> store price, 2.5 times or what? I am not all that often in ??>> a position where I want to buy a full bottle and I also ??>> wonder what how much is in the average glass and what is ??>> the most usual price, perhaps 1/4 of the bottle price? ??>>

ER> If I can read between the lines a bit, I think you're ER> asking how to get the most bang for your restaurant buck. ER> Forgive me if I ascribe unintended meaning.

No, it really wasn't "bang for the buck" but I can sometimes wonder whether I am being taken, especially in an out of town restaurant :-) Unfortunately, I am not in a position to take JP Morgan's advice on yachts: "If you have to ask the price, you can't afford one".

Thanks for the information and it does not seem that the markup in decent restaurants has changed all that much. I appreciate that buying a wine unobtainable in a store has to be a personal decision but an estimate of the markup on wines that I do know about can affect that.

James Silverton.

Please don't forget that you have somewhat independent variables at work here. The "store price" of a given wine can vary considerably depending upon the markup of the given store; these are by no means consistent. Some stores have graduated markups, some are low, some are quite high. Take a wholesale $10 bottle. A low markup store might shelf it at $20, a high margin store for $30. Now a restaurant buys the wine at wholesale, so a 2.5x markup restaurant might just have the wine on its list for less than some retail stores would. So to judge a restaurant you must know the variables (wholesale price, retail markup, restaurant markup) in addition to any discounts from wholesale that either the store or restaurant might enjoy. My point is that the restaurant does not price according to retail store price; nor are the retail store prices consistent.

pavane

pavane wrote on Wed, 19 Apr 2006 17:42:08 GMT:

p> "James Silverton" wrote p> in message news:3I-dnVa1ga19 snipped-for-privacy@comcast.com... ??>> Hello, All! ??>>

??>> I know this is a perennial topic but things do change from ??>> time to time. Anyway, I wonder what is the prevalent price ??>> for a bottle of wine in a restaurant these days; twice the ??>> store price, 2.5 times or what? I am not all that often in ??>> a position where I want to buy a full bottle and I also ??>> wonder what how much is in the average glass and what is ??>> the most usual price, perhaps 1/4 of the bottle price? ??>>

p> Please don't forget that you have somewhat independent p> variables at work here. The "store price" of a given wine p> can vary considerably depending upon the markup of the given p> store; these are by no means consistent. Some stores have p> graduated markups, some are low, some are quite high. Take p> a wholesale $10 bottle. A low markup store might shelf it p> at $20, a high margin store for $30. Now a restaurant buys p> the wine at wholesale, so a 2.5x markup restaurant might p> just have the wine on its list for less than some retail p> stores would. So to judge a restaurant you must know the p> variables (wholesale price, retail markup, restaurant p> markup) in addition to any discounts from wholesale that p> either the store or restaurant might enjoy. My point is p> that the restaurant does not price according to retail store p> price; nor are the retail store prices consistent.

True enough, but all the customer has to go by is the store price and a markup ratio of two over a non-sale price is a

*rough* guide to a reasonable price in the restaurant. I don't patronize stores whose prices are markedly different from the average unless I'm looking for something unusual. I'm not debating the justice, ethics or practicality of restaurant profits in general.

James Silverton.

There are several sites that price wine such as

. In many of these you can cover the whole world down to certain cities in some cases. Let us take an example that is lilely to bring out the greed for top wines, say Petrus

1982. Wine-searcher gives prices per bottle from US$ 1833 to 4062 for Petrus 1982. The lower end of the cost range usually is for auctions, and the top end is for carriage trade wine stores. Many of the most desired wines are available only at auction when they first become available, so restaurants, high-end wine stores, and sometimes middle men buy at auction and then resell, with a markup, of course, that being what their market will bear in a case such as the 1982 Petrus. Thus, for a high end older wine, the best deal for the wine will be buying the wine directly at auction yourself rather than paying the auction price plus a big markup for the middle man. Very few restaurants have the money for investment to buy wines young when still at a reasonable price and age them for up to several decades. A few restaurants that stock high end wines do bid directly at auction for their top wines - I believe some restaurants in Las Vegas are an example.

Although most restaurants will not have owned the wine for long and thus investment costs for the wine are no great factor, one must consider that a few bottles of wine will be refused, and many high end restaurants will not force a person to pay for the wine if it is refused. In some cases, the restaurant can not return wines for refund, especially older ones, especially at auction. Thus a markup for all of this has to be included.

I think the best basis is the average auction price of the wine. Thus you can compare roughly what the total markup is for the wine in the restaurant, with part of the markup perhaps going to a middle man and part to the restaurant. You can then decide if you should try to buy the wine at auction yourself or if you are willing to pay the markup.

Most of the upscale restaurants with a well rounded wine list is 3x retail. By retail I mean what typical wine stores in the area price their bottles. A $25 bottle at a wine shop can be found at places like Costco for $18. I don't buy wine at the retail shops. So when I see $75 for a bottle of wine I can buy at Costco for $18 I tend to pass on it.

I have found a few restaurants that are 2x the Costco price and during happy hour they sell the bottle at 1/2 price. A good deal that got better! Those are the places I frequent the most when I wish to dine with wine.

In states like California or Nevada where its legal to bring your own wine its cheaper to pay the corkage fee of around $10 and drink exactly what you want.

In your area, the standard restaurant mark-up is cost x 3

the standard retail store is shelf markup cost x 1.5

exceptions are promos where the wholesaler(also cost x 1.5 average) knocks the price down to cost x 1.25. and the retailer cost x 1.1.

Now in DC, since the retailers are allowed to direct import, onc can occasionally see a wine at winery cost x 1.25 or so. this is down from WC x 1.25(or so for importer), 1.5 for wholesaler, and 1.5 for retailer.

A DC restaurant named D>Hello, All!

I wish that all restaurants used some kind of formula, some seem random. A certain place in Carmel CA had its lowest markup at 2x retail for lesser known wines and 6x for well known ones ( at least when I knew the retail price), $1200 for '95 Lafite!? And this was around 1999! Who drinks a four year old Lafite? I usually bring my own wine unless the place has a very good list with many choices, XYZ in San Francisco being an example. And since German Riesling goes with everything it's easy to pick one to bring.