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How Restaurants Decide on the Price for Wine

Written by The Two River Times. Posted in Cocktails & Cuisine, Lifestyles

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Published on March 22, 2013 with No Comments

By Charles B. Rubinstein

Buy it and never count the cost;
For one white singing hour of peace
Count many a year of strife well lost …
Sara Teasdale, Barter

 

There’s no doubt that wine belongs at table alongside a meal to enhance the enjoyment of both.

When dining in a restaurant the markup on wine oft times gets in the way of being able to choose a suitable pairing. Wine pricing in a restaurant is somewhat of a mystery to the diner. What’s written in the wine list is clear enough, but the formula for the markup behind the pricing is far from clear. Restaurant pricing strategies vary widely from restaurant to restaurant. The same bottle can be priced differently in different restaurants.

A restaurant with a top chef, a few sommeliers, a carefully chosen wine list, a good wine cellar and the proper stemware should be charging more than a restaurant without such plusses. That’s understandable, but what’s frustrating to many diners today is that the low end of a good wine list has moved up from the $30 to $35 price range to the $40 to $50 price range, and the rest of the list has moved up accordingly.

Wine and liquor are profit centers for restaurants so don’t expect bargain prices to abound. Wine drinkers shouldn’t complain too much about the pricing because beer and liquor carry the biggest markup. There are some restaurants around the country that have great value wine lists, but that’s a subject for another day.

Most restaurants use a sliding scale for the markup on wine. The lower end usually has higher markups and the higher end has lower mark­ups. There is really no such thing as a standard markup because it varies so much, but the somewhat typical markup is two to three times the retail price or an even higher multiple. Be aware that wholesale price is typically 67 percent of the retail price, but that too can vary with markdowns, volume purchase discounts and can even go up close to the retail price if it’s a state run distributor.

What’s a fair price is a good question, but it’s not easy to answer. Bern’s Steak House, Tampa, Fla., is the perennial recipient of the Wine Specta­tor Grand Award for its wine list, which has 6,800 unique wine labels. Bern’s reportedly triples the wholesale price for all its wines, which means that the markup is twice retail based on a wholesale price of 67 percent of retail. What is even more favorable to diners is that the older vintages were bought as futures or upon release, which means that the wholesale price was less than wholesale today. However Bern’s does appreciate the prices every few years.

Where does that leave us as to the answer to the question I posed earlier? My opinion is that twice retail is fair and that anything above three times retail exceeds the upper threshold for fair. Of course there can be mitigating circumstances, but that’s my rule of thumb.

If you are looking for value on a wine list you can go to the website of the restaurant, look at the wine list in advance and check the markup over retail. If you don’t know the retail price offhand, you can look it up at wine-searcher.com. You can even do that at the restaurant using a smartphone if your dining companion(s) will tolerate such behavior. The advance lookup is much safer.

While on the subject of value, avoid wine by the glass. However there are exceptions such as when you want to try a few different wines. Be aware that one glass is oftentimes the wholesale price of the bottle.

I would like to see restaurants offer special pricing on their wine list. One such restaurant, the highly rated Buccan in Palm Beach, Fla., drops the price in half on all wines on its list on Monday nights. Judging from the crowds on Monday nights, which looks almost but not quite like the crowds on Saturday night, the event is a success. General manager Shannon Dye told me they started the program soon after the 2-year old restaurant opened, and they are happy with the outcome. Another good restaurant, City Cellar in West Palm Beach, Fla., features greatly reduced prices for a changing group of wines listed on its menu every night and half-price for wines listed under $75 on Monday nights. The promotions are the brainchild of general manager Jeremiah Bennent, who is passionate about wine and happy about the results. I wish more restaurants would follow a similar approach.

 

If you have questions or comments about wine write to me at The Two River Times™ or email me at trtwineman@aol.com.

 

Pick of the Bunch

Highly Recommended

2011 Luciano Sandrone Dolcetto d’Alba, Piedmont ($25)

2010 Turley Wine Cellars Zinfandel, California ($50)

2009 Long Shadows Sequel Syrah, Columbia Valley ($50)

 

Recommended

2011 Mohua Sauvignon Blanc, Marlborough ($15)

2010 Argyle Pinot Noir, Willamette Valley ($21)

2008 Pierre Gelin Clos Napoléon Premier Cru, Fixin ($40)

 

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