What’s a Fair Price for Restaurant Wine?

By Robert Paul.

Have you ever looked at a wine list in a restaurant and thought, “you’ve got to be kidding.” Suppose you go to a restaurant and find a familiar bottle listed on the menu, say a Ravenswood Vintner’s Blend Zinfandel, which you regularly purchase for $7-$9 a bottle. This restaurant offers it for (a mere) $32. And the correct response is: “You’ve got to be kidding.”

Since customers assume that a restaurant can buy wine for less than they can, an obvious markup of 400% or more above the retail price is upsetting and insulting. It says either the restaurateur believes his customers are entirely ignorant of the price of widely sold wines in America or that he doesn’t care. Restaurateurs who don’t care should seek another line of work; those who believe their customers are generally ignorant will fail in what is, after all, a competitive commercial enterprise.

So what should a restaurateur do about charging for wine?
First, choose wines that pair well with menu offerings. Offering wines at two or three price points is ideal.

Second, look for wines that are not generally available in grocery stores, Sam’s Club, Costco, etc. Wines should be representative of a grape varietal, such as cab or zin, or of a regional style (cotes du rhone or Chianti for example). The markup above the retail price should be no more than three times.

Third, when the wine list includes popular and generally available wines, say the Ravenswood mentioned above, if the price exceeds $24, it is offensive. Isn’t three times the retail price enough? Doesn’t a restaurant want to encourage people to order a bottle of wine? Does a rip-off price encourage a diner to order that bottle?

Fourth, I believe that when the retail price of a wine increases, the markup should decrease. So, if a diner orders a bottle of LaCrema Pinot Noir which retails for c. $18, a restaurant price of $35 (2x retail) is more than sufficient to compensate that establishment. When a more expensive bottle of wine is included on a wine list, the markup should be smaller. If, for example, Piper Heidsieck Cuvee Brut retails for about $30 a bottle and you actually want to sell some for celebratory occasions at your restaurant, I believe the bottle price should not exceed  $58 and $48 would be even better. Remember, the restaurant’s cost is probably less than $24.

The wine-pricing objective should be to enhance the diner’s experience and the restaurant’s bottom line, i.e. a win-win outcome. If the markup is reasonable, more diners will order wine. If more diners order wine, they will enjoy the meal more, servers will earn more money as will the restaurant and that’s fair for everyone.

-Flavors And More Magazine: August 2009

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