You go into a restaurant, wine bar or the wine shop down the street and the selection can often be overwhelming for a lot of people. Don’t worry, you are among friends and we’ll help you through it! For most, finding that perfect bottle for the moment includes finding something that is affordable or of seemingly higher value. You may often hear about QPR, meaning Quality Price Ratio, and when QPR is high it means a bottle of wine is drinking way above its price point. Boy, it’s nice to find those.
Until recently, a lot of sought-after wine has been way too expensive for most folks and their everyday drinking needs. But, how is the price you see in the store or the restaurant derived in the first place? Here’s a real basic example and some rules-of-thumb to consider, but keep in mind that state regulations, shipping costs, volume purchasing power and supply and demand, among other factors, can cause prices to veer from this simple application.
Pricing from a Retail and Restaurant may be marked up from the wholesale price as follows:
- Retail (Wine store): 150% or 1.5x
- Restaurant: 250-300% or 2.5-3x
So, a bottle that is sold from the winery or producer for $9 may be priced at $13.50 at your local beverage store and anywhere between $22.50 – $27.00 at the restaurant. You are probably not going to know the wholesale price to start these calculations, but if you’re in the wine bar and have a mobile phone, well you know what they say: “There’s an app for that.” You can back into the wholesale price by tracking down retail prices on the Internet or using a wine app (there are many to choose from – click this link for an analysis of wine iPhone apps).
Ultimately, it’s not a great choice to buy wine by the glass in restaurants because it’s general practice for them to price each glass at the wholesale price. So, in our example, a glass may cost $8 or $9. Keep in mind also you should get 4 glasses or 12 tastes (2oz.) from a bottle. However, if you like to try different types of wines from different regions, this is really the best way to do so in one sitting. Hopefully, your bartender will be wine friendly and let you try some tastes for free. At any rate, hopefully you are now armed with some basic wine math principles to help you find some good deals, just like the 2006 Caravan Cabernet Sauvignon from Darioush I found at Abattoir that retails for $34 at the wine shop and only cost $39 at the restaurant!
Cheers!
Here in Memphis it’s not uncommon to see full bottles listed on a menu at 4x retail. What happens is that you get a list full of drinkable, but not spectacular or ageworthy wines that retail for $15-25 listed for $60-100. So the kind of wine I might open for the hell of it on a Saturday afternoon with a burger suddenly becomes the least painful option in a fine dining establishment. And ordering a second bottle becomes a major investment.
Restaurants have to make money, I get that. Markups are even crazier on liquor, but there you’re paying for the labor of preparing the drink and the convenience of having access to dozens of expensive bottles. The end result of the wine pricing is that it stifles the development of a wine culture, makes people associate wine with special occasions, and leads to a bunch of mediocre wine sitting behind the bar for months or years.
Benito, all very good points. I get that there are other costs that have to be covered as part of drinking that wine, but it can’t be THAT much can it? I never worked in a restaurant so don’t have insider information as to those operating costs, but I have experienced little-to-no-markup to the 3x (4x in Memphis), so it’s definitely not consistent. You make a great point about the culture that it smothers and lack of creativity and selection behind the bar. ’tis a shame.
There’s some other neat strategies I’ve seen or read about, like a review in the NYT a few years ago about a restaurant that charged a straight $15 on top of the retail price for bottles of wine (sorry, don’t have a link or name). Quite popular with customers, if I recall.
I saw something interesting in Cleveland, where a restaurant charged 2x retail for bottles. (And I don’t really have a problem with 2x.) But they also charged straight retail if you wanted to take a full bottle home with you.
Just thought of something else… People who aren’t currently wine drinkers, but are primarily exposed to wine pricing through menus, are going to have a really skewed view about what wine actually costs and might be frightened away from ever getting into the hobby.
Yep. It is all about the cost of running a restaurant; the main factor being waste and the one very basic strategy; (don’t tell anyone) is to cover the cost with the first pour.
Abattoir really does have some killer deals on cool wines. They have ’05 Girardin Burg for $30. You just don’t see a lot of wine lists with options like that.
I was at La Pietra Cucina last weekend and they had the Nino Franco Prosecco for $45 or $50 (I can’t recall exactly). The last time I bought this retail, less than a year ago, I paid $13.99.
While I realize they have overhead to pay for, I cannot justify that kind of mark-up for a prosecco I see at Kroger every week.
If you’re gonna charge me 300%-400%, I expect it to be something cool and unique.
Dave, Benito and Jimmy, thanks for the comments. I defintely learned about trying to pay for the bottle with the first glass, which is why you see so many by the glass prices at $10-15 ranges… sheesh.
Jimmy, we have to go back to Abattoir, the value is phemonenal and I am with you on the Prosecco example. I keep a bottle or two of Rustico at all times and wouldnt think of spending that $$ at a restaurant either.
The exception on BTG pricing in restaurants may be if there the distributor has different deal prices for restaurants vs retail. For example- when I worked for Empire our restaurant bottle cost for Louis Martini Napa cab was much lower than the retail bottle cost. You would see Louis Martini Napa for $9 or $10 BTG, a relative bargain because in stores it was retailing for $20-$25. Grocery and Specialty stores like Whole Foods are probably closer to the 50% markups. Package stores are going to average about a 30% markup- with some exception like a special deal where they’re getting longer margins. Some everyday items that multiple stores are competing on price, the margins can be much lower.
Matt, thanks for the comment from the distributor perspective. So, as expected, definitely some economics have to come into play too. This really makes it kind of fun, or frustrating, to find those rare “deals” out there in your community where these stars align.