Restaurant markups: What's reasonable?

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One question I've always had about this is why the mark-up should be in the form of a percentage of the retail price. If the mark-up is

100%, a wine that retails for $20 in the store costs $40 in the restaurant and one that retails at $75 costs $150. In the first case the restaurant makes $20, in the second they make $75, but what have they done differently? The restuarant likely bought both wines from a wine distributor, stored them for a period of time varying from zero to years, and presented them to you. Maybe the $75/bottle wine was presented with a bit more fanfare -- or maybe not. Maybe the $75 bottle spent more time in the restaurant's wine celler -- or maybe not. In any case, what did the restuarant do differently that was worth $55?

A similar issue is tipping on the basis of a percentage of the check. Is it more difficult for the waiter to serve the caviar than the shrimp cocktail? There, I think it's the shrimp cocktail waiter that gets short-changed more than the caviar waiter being over-tipped, but it feels a bit odd to tip $50 on a $25 check which is what we should probably do.

Regards,

Kent Feiler

Kent Feiler wrote in news: snipped-for-privacy@4ax.com:

But then the mark up is usually on a sliding scale with 300% on the low end wines going down to something close to 150% for the upper ends. In your example an $8 bottle would go for $24 a $20 for more like $50 and the $75 for a little over a hundred.

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The restaurant tied up a greater number of dollars in wine inventory for the $75 bottle.

Tieing up money in inventory costs the restaurant more, and they need to recoup that cost.

Unfortunately, Leo, my preference is for a markup that is a fixed fee rather than a percentage of the purchase price. However, as an upper limit, I'd say 150% come closest for me. I tend to feel a sense of outrage when I see a 200% markup on a restaurant wine list.

Mark Lipton

50% is plenty for a wine that's available currently in wine shops. Much beyond that begins to make me angry.

Tom S

Here in Chile it's usually about 100% markup. I think it's way too much.

At those markups I rarely drink wine at restaurants, and when I do, I usually go only for good values.

I find that many places have almost a constant, rather than proportional, markup. $10 bottles become $30, but $50 wines might well be only $70.

Kieran

Here in France a restaurant with 200% markup is considered very reasonable. Usually markup is 300% or more.

Mike

Mike Tommasi, Six Fours, France email link

I'd love to see 50% over retail, but one seldom sees that on East Coast.

I never quibble at 2X retail. I don't like 2.5X, but sometimes one pays. I generally refuse to pay 3X. The exception might be at the low-end, I've paid $24 for a good quality Muscadet that one can find for $8 at a restaurant known for its shellfish; I did so happily (they used good stemware, and there are costs involved in that).

Ideally a restaurant would lower the markup on an upper-end bottle, but it's seldom the case. Mostly inconsequential to me- I could probably count the times I've ordered a bottle over say $80 on my hands. In most good restaurants there's some good wines available in the $30-60 range. It's easier for me to enjoy a $40 wine that I know my local store carries for $20, than a $150 wine that it carries for $75. Dale

Dale Williams Drop "damnspam" to reply

Part of the problem for me is lack of sufficient knowledge. Sure, sometimes I'll happen to see a bottle that I know, or two, on a list; but in general I have to guess at what the start-price might be, and then make a decision on buying. Not a problem if there's a good wine waiter, but that's often not the case, alas.

[Thanks for the restaurant review, Dale. It's on the list for maybe my anniversary in June, so I'll have to call/email pretty soon!]

Ewan

That the real reason I canceled my trip to Spain and France. Wine was to much at restaurants. :-)

Do they allow you to bring wine with you and if so what is corkage fees at restaurants in France.

dick

By retail, are you referring to the price I would pay buying direct from the winery or the street price I'd pay at a wine shop/liquor store (generally

20-35% less than the full price from the winery)? For restaurant prices, my price limit is double the winery price (or roughly triple the street price). I will go that high for wines that are difficult to find or generally unavailable in stores. But it grates on me to find common wines at double the winery price. (And don't get me started on wine-by-the-glass pricing!) I've been passing on wine in restaurants more often or bringing a bottle and paying the corkage.

" larkin1734" wrote in news:8_Nnc.10597$ snipped-for-privacy@typhoon.sonic.net:

retail is the street value at retail outlets. Winery charges in many areas (ie France and Italy) are less than what you would pay in a retail setting as they tend to sell at wholesale (or less) to the consumer.

There is a guide book published here in the US that tells restaurant managers the best way to operate their businesses. The guide is in very wide usage. On the subject of wine pricing it reccomends a

300% mark up over wholesale. Retail is usually 50% mark up here. So that is 200% mark up over retail. I think smart managers like to have some wines that are very cost effective and some wines that they mark way up to let the show offs order. A friend that had a restaurant in Marina del Rey in Los Angles marked his cheap stuff ( $7 to $17 ) 400%, his mid range wines ( $18 to $60 ) 75% and the high end stuff as much as 500%.

A former member of this group managed the largest cellar in the UK. It was all done with software and the bank. It would have been interesting to get his input.

Or the manager of the 600,000 bottle cellar at Bern's Steakhouse in Tampa.

"Mike Tommasi" skrev i melding news: snipped-for-privacy@4ax.com...

Same in Norway - but you'll have to factor in tips. There was a thread some years ago on low salaries for restaurant people in the U.S which is why tip normally is 20% (right?). In my quarters service is included with the bill which is rounded off if you want - about 5% is common practice. Anders

I want to clarify what you're saying here -- by a 200% markup over retail are you saying 200% for the markup, added to the retail cost (i.e., if a wine is $20 retail the markup is 200% of that, or $40, for an acutal cost of $60), or are you saying the actual cost to the diner is 200% of retail ($40 for a $20 wine)?

My experience (California) is that 300% of the retail cost ($60 for a $20 wine) isn't uncommon, but I do see less. I'll also more often than not bring my own, if I know the restaurant has a high markup and I want to have a nice wine.

One of my favorite (for the wine) local restaurants also runs a smal wine shop. You can take any wine from the wine shop to the restaurant and have it at retail.

Well, to be fair, they have to invest more capital in maintaining an invetory of the higher priced bottles.

Heh, the order-at-the-counter Asian restaurant at my office complex sells Two Buck Chuck for $5.00 a glass. If you figure five glasses per bottle, then he makes $23 from every $2 bottle.

And he doesn't even have to maintain an inventory -- if he runs low, someone can walk to Trader Joe's to buy more.