You are absolutely right to question that. Being a Mathematician/ Engineer, I often get the numbers wrong. I confused it with the
50% mark up. 300% mark up means it would be 3 times the wholesale price. I should have said that retail is 150% mark up instead of 50%.
Don't the restaurants in all of California buy wholesale? I know some states don't let them and small restaurants have a hard time dealing with wholesalers. I have always found California restaurants to be very good on wine pricing. I seem to remember when Plump Jack first opened that they sold wine at the table for the same price as their retail store was selling it.
You guys are confused. Using your own example, a wine with a 100% markup (based on retail price) would sell for the _same_ as retail! Drawing that a little farther, a wine with a 50% markup would (according to your math) sell for _half_ of retail. That is to say, a 50% markup would be the same as a
50% mark_down_. None of that makes any sense at all, of course.
A 300% markup means taking the price and adding another 300% of that price to it. IOW, a 300% markup = 400% of whatever the base price was.
in article lKZnc.47165$ snipped-for-privacy@newssvr29.news.prodigy.com, Tom S at snipped-for-privacy@spamlesspacbell.net wrote on 5/10/04 10:43 PM:
FWIW: My 20 years in retail taught me two things: 1) that I didn't want to be in retail any more, and 2) that markup is the calculation of the % of profit in the selling price. In the examples that have been used here the cost is the retail shelf price and the selling price is the menu price of the wine. So.......... $60 menu price minus $20 shelf retail = $40 profit; and $40 divided by $60 = 66.67% MARKUP. I spent all those years having to live or die by the result of that calculation, so I will stand by that definition.
What's been used in most of these posts is a calculation of the relationship between the selling price and the shelf retail in terms of the higher being X-times the lower. It would seem natural to say that $60 is 3 times $20 dollars , or 300% marked up ...... but in retail math you focus on the relation of the profit to the cost. So.... The $40 dollar difference between $60 and $20 is the "markup" and $40 is 200% of $20, not 300%.
All that said...... it still wonder when I see $28 on a menu for a bottle of wine I know I can buy for US$5.99 at Cost Plus. And worse, to be asked $7.50 for a glass of it. Especially when it is likely that the restaurant may be paying $4 or less for that bottle.
Does anyone here know that restaurants generally pay for their wine as a % of the normal shelf retail..... and how their overall "markups" (menu price vs. their actual cost) compare with food markups in restaurants??? If they're the same or less, that would certainly explain why they feel justified.
As someone working in the service industry & the holder of the wine list key....Both choosing wines & pricing them, I can give you a ggod heads up on what is generally the norm (at least here in B.C., Canada). Standard Markup is 100%... In the past, I have worked with a sliding scale... the more expensive bottles were 60 to 70% & the cheap plonk was up to 120%. The owner I currently work for is fixated on the 100% thing, regardless of my lobbying for the sliding scale. As to Kent's comments "what has the restaurant done for me lately"..... First & foremost they invest money in the standing inventory....That expensive wine exists on that list because the buisness is willing to carry the overhead of buying the bottle, storing it ect.... From a personal perspective, often, getting higher end wines is quite the dog & pony show. I have spent countless hours with wine reps, @ tastings & on the phone with distributors sourcing out hard to find wines.... Then waited & waited & waited for them to arrive.... In BC, you more often than not, must buy a minimum of a case of these type of products... so that $50 wine that you're paying $100 for, cost me $600 plus tax to make available to you. Tom's comment about 50%..... I'd LOVE to see it Tom, but it's not a fiscal reality.... I'd sell WAY more wine....but put my establishment out of biz on the way. I can't speak for the rest of the world, but here in Canada.... The average profit margin, for a PERFECTLY run restaurant is 5 to
8%. That's of course if nothing gets broken (which it does) and no mistakes are made on food & booze, requiring re-makes or write offs (which they do).... Liquor & wine sales are often the thing keeping your favorite bistro open. Please note, the 5 to8% margin usually only kicks in after year 2 or more often 3, before that most new establishments are operating in the red.
in article 4V8oc.23385$F04.18265@clgrps13, Mathew Kagis at snipped-for-privacy@telus.net wrote on 5/11/04 11:26 AM:
This input was very helpful and much appreciated, but could you bring the markup % issue into more clarity for me as you are expressing it? I would just like to be sure that (in your example) 100% markup means that the menu price is double the retail shelf price....[and a 60% markup of a $10 shelf retail would have the wine at $16 on the menu]?
From the profit statement perspective, then..... a 100% markup would be a
50% margin (or actually more like 67%, if the restaurant pays about $6.65 for that $10 retail bottle). Does that square with your knowledge?
Midlife: you got it.... although, our 'licencee discount' is'nt as high as all that, I probably pay about $8.50 for a $10 bottle.... We tend to base our markups on the retail price, however (Don't tell my owner) I tend to hedge it down a little & base it closer to my discount price. In the case of specialty products, ones I know can't be got elsewhere in town, I tend to hedge the margin up a little to compensate for the greif I went through to get it....
Mine is an accounting perspective. My company sells food products to grocery stores and is carried by 97% of all supermarkets nationally.
I can tell you without any doubt that Kroger's, Safeway, Albertsons, Wal-mart, Publix, ....they know there is a difference in a markup and a gross margin.
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