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Is corkage the way to go?

How often have you commented on the huge mark-ups restaurants put on wine? I know I have, particularly when you know full well that the price is 3 times the cost. Restaurants do have to make a living though and of course they should mark up their wares appropriately and I fully understand why, for example, a £8 bottle (at retail) should sell for c.£20 in the restaurant but is it acceptable that the mark-up is the same for, say, a £20 bottle where the restaurant price would be close to £60? In the first instance the restaurant would be making a gross profit of £12 and in the second instance they would be making £40 - but it's still just a single bottle.

L'Absinthe in Primrose Hill has a different policy where wines are grouped by price band and a set mark up, or corkage, is applied to each band. You can read more about our experience of L'Absinthe at www.thebigblackpudding.com.

So is this the way we would like to see restaurants go? Would it encourage us to drink better wine or would we still choose the same but pocket the difference?

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  1. I see Shaun Hill is doing similar at the Walnut Tree - putting wines into three price groups. I'd put a fiver on the suggestion that if Shaun is doing it, others will not be far behind.

    As for the Harters partnership, I no longer drink. Mrs H does - so, unless she's on a steamer, a full bottle is not required. What is required is a good range of half bottles or by the glass. And both of those are where the real rip-off often applies, IMO.

    J

    1. To me, it sounds a bit snobby and shortsighted to assume that wine that is more expensive is "better". In this age, there are great wines available to suit all budgets and any restaurant worth its salt would have a good list from which something to suit your meal can be suggested in your price range.

      Personally, I'm not one for enjoying "great" and expensive bottles when I eat out. I'm prone to invite people over that I really like and cook a meal I know will match it well. Besides, I want the time to really enjoy it in relaxed, unstuffy surroundings.

      1 Reply
      1. re: nanette

        >> To me, it sounds a bit snobby and shortsighted to assume that wine that is more expensive is "better".

        And who is assuming that??

        I would love to be able to purchase a $10 bottle of wine that would match quality of my typical say $25 bottle. This happens very rarely. So even though one can never say that more expensive wine is always better I am long past days when I knew so little about wines that a typical $10 bottle was to me like heaven.

      2. >> I fully understand why, for example, a £8 bottle (at retail) should sell for c.£20 in the restaurant but is it acceptable that the mark-up is the same for, say, a £20 bottle where the restaurant price would be close to £60? In the first instance the restaurant would be making a gross profit of £12 and in the second instance they would be making £40 - but it's still just a single bottle.

        Unfortunately this is a flawed logic. Any business person would tell you that when they invest more their return on the investment must also be larger otherwise it makes no sense. It may simply take much more time to sell a $50 bottle of wine than a $20 - it sits, waits and occupies room, it carries higher risk for the business owner. I also don't think that your example is a valid one - the mark up usually diminishes with more expensive wines (it is opposite in your example). If you found a restaurant that is willing to experiment with different pricing techniques - more power to them (and to you).

        1. Several sommeliers and restauranteurs are doing a +$ for all wines. Many of these are in the US$10 - 20/btl. range, and the hope is to encourage patrons to try wine with the food.

          As we travel a lot, and much to expensive cities (London is a twice-threex/year trip), I feel the pinch. It is not uncommon to visit a great restaurant in Las Vegas, only to see a 600% markup (over wholesale) on the wines. Same for spots in Honolulu. It hurts, but also prompts me to work really hard to come up with great food/wine matches within a normal budget.

          That said, I do not normally BYOW, even if the spot has a fair corkage charge. I just cannot imagine traveling trans-Pacific, or trans-Atlantic with my wine to drink at a restaurant. Same for picking up a few bottles at Odd-Bins, or likewise. I'll pay the markup and live with it.

          Some years back, the trade did a study on the "profit," from wine sales in restaurants. The upshot was that restaurants with "fair" markups, sold enough additional wine, that the profits were actually higher. I have tried to find this study, but have failed.

          Still, I cringe when looking at some of the wines lists, but go with them, vowing to find a more wine-friendly restaurant next trip to ____ .

          Only BYOW has been for special occasions, with the permission of the restauranteur, and an offer of a glass to the sommelier, the head server, the owner, and the like. Never paid a corkage in my life.

          Hunt

          1 Reply
          1. re: Bill Hunt

            i often avail myself of the opportunity to BYO and pay a corkage fee. However, I do so because I have a lot of small production wines, or older wines that I'm not going to find on a wine list. Like you, I only do it with the permission of the restauranteur, and an offer of a glass to the sommelier, the head server, the owner, etc. Here in DC there are quite a few restaurants that offer free corkage on certain nights, usually Sun-Tues, in order to encourage people to come to dinner on nights that are normally slow.

            I do know folks who BYO because they believe that wine list prices are too high, but my attitude is that if I can't afford the wine from the list, don't order from it and search out places that have reasonable markups. I don't begrudge a restaurant marking up wine, but I can decide whether or not I am willing to pay those prices.

          2. We've had this discoussion several times before. Part of the problem is, of course, the legality of corkage/BYO. Simply put, it is ILLEGAL in many locations, and in many others it may be allowable under certain circumstances but illegal under others. Imagine, if you will, that licensing laws were not set by Parliament in the UK, but varied by county, and within each county, sometimes by town council. That's how it is in the US.

            Add to this the fact that, in some states (again, here in the US), restaurants pay the same basic price (i.e.: before any quantity discounts are applied) as a retailer will pay -- in other words, they pay wholesale. But in other states, they may actually pay the same as the individual consumer -- in other words, retail.

            Add to this the fact that -- while there is a "convention" of mark-up in retail, none really exists in restaurants. Tradition holds that retail pricing is 150% of wholesale (that is, a bottle costing $20 wholesale will retail for $30), so it's a 50% markup for a 33.3% profit. And while there are certainly retail stores which will sell for less than that, few are the stores that sell wines for more than that. Also, it is exceedingly rare for a retail price to be higher than (but not lower than) the winery suggested retail, except on certain so-called "cult" wines.

            When I first got into the wine trade here in California, "standard" markup in restaurants was to simply double the wholesale price -- 200% of $20 wholesale = $40 wine list. Then, it became 2.5 times the wholesale price, or double the retail, or three times the wholesale (or retail!), and so on and so on and so on . . . .

            I'm a firm believer in "reasonable" corkage fees. Yes, the restaurant needs to make money, and yes, the restaurant has a certain amount of money tied up in inventory. However, some of those bottles -- especially in more upscale, fancy restaurants -- are there more for "dressing up the list" (in other words, "for show") than they are for actual sale. What is considered "reasonable" will vary not only with the establishment, but with the level of disposable income of the patron. My rough rule of thumb is the profit on the least expensive bottle on the wine list, or $25, give or take -- depending upon the establishment and level of service.

            It's been my experience that modestly prices wine lists encourage sales; over-priced lists encourage BYO. High corkage fees, and/or an artificial limit to the number of bottles one can bring in (e.g.: "two bottles per party" -- a part of two or a party of twelve, both can only bring in two bottles???), do NOT encourage sales in lieu of BYO, so much as they encourage seeking out a different, more wine-friendly establishment.

            What I do NOT condone is the idea of bringing in a bottle that is already on the list. IMHO, corkage on that bottle is the price on the wine list for that same bottle.

            Neither do I encourage the idea of bringing in, say, a $2.99 (retail) bottle of, say, White Zinfandel -- BUT . . . this is in fact a judgement call. Some ridiculously inexpensive bottles may have been given to the dining patron as a gift, who may be unaware of how inexpensive the wine actually is, or in fact, it may indeed be their favorite wine. Here, the sommelier (or waiter or maitre d'hotel) must exercise careful judgement, but at NO TIME should the sommelier (or waiter or maitre d'hotel) made the patron feel embarassed, ashamed, or otherwise "on the spot" over their selection -- it's a sure way not only to lose a customer forever, but to insure that bad "word-of-mouth" is spread.

            But I digress . . . .

            >>> Would it [corkage & BYO] encourage us to drink better wine or would we still choose the same but pocket the difference? <<<

            There are several restaurants at which I dine regularly and almost NEVER bring in my own wine. I don't need to: the wine list is filled with excellent selections at reasonable prices.

            There are several restaurants at which I dine regularly and almost ALWAYS bring in my own wine: the wine list is either quite limited, with little that appeals to me; not well thought out, and few selections actually compliment the cuisine; or else is so expensive as to be impossible to find value in any of the offerings.

            With the exception of Champagne, I rarely bring in a wine I've bought "off the shelf." Most of the wines that I actually DO bring into restaurants are old(er) reds from my cellar, wines I have specifically chosen because a) they will compliment the cuisine of this specific restaurant, b) they are sometime I'm looking forward to drinking and/or sharing with my companions that night, or c) they are wines I've saved for a special occasion, and tonight is the night . . . a birthday, anniversary, etc., etc.

            I don't know if that means I'm drinking "better," but I do know that, in most cases, I wouldn't be able to afford the wine I am bringing in were I to purchase it off the wine list.

            Cheers,
            Jason

            4 Replies
            1. re: zin1953

              Jason,

              It's not on point to this topic exactly, but as an aside to the pricing formulas, I am aware (at least in California) that some wines are priced lower if the restaurant agrees to pour the wine by-the-glass, obviously to encourage that. Sometimes, as well, general restaurant pricing is lower than retail pricing (excluding huge volume price breaks). It seems to depend on what the winery and wholesaler are trying to focus on, and that makes sense. On the other hand I have had wineries explain that they are reluctant to give low pricing to retailers with on-premise wine tasting bars (wine bar within a retail store) because a more competitive retail pricing formula is likely to be employed and the wine will be sold (by the bottle) at lower than desirable-for-the-winery prices.

              Bottom line..... in some cases (usually highly desirable wines at highly desirable restaurants) the restaurant is getting the best price of anyone except the largest retailers..

              1. re: Midlife

                At the risk of boring everyone with trade-specific verbiage, the "Case One" price -- that is, the wholesale price for one case (12/750ml bottles) -- MUST, under California law (at least), be the same for everyone. That said, there ARE indeed a variety of discounts, post-offs, and promotional deals that may be offerred. These (theoretically) must be offered to everyone, but there can be some "restrictions" which -- if worded carefully -- can be legally accepted.

                Most wholesalers offer a "Family Plan" discount, available to everyone. This is similar to the retail customer who gets a 10% discount on a case of wine, "mix or match." The most common Family Plan (FP) discount struction is "5%/5cs., 10%/10cs., 15%/25cs." -- you get a 5% off the Case One price when you buy five cases, 10% when you buy 10, and 15% off if you buy 25 cases.

                Some wines are priced "NET." They have no discount applied to their Case One wholesale price, BUT they will "build for count." That is, you buy (e.g.) four cases of Chateau Cache Phloe Chardonnay and one case of Jean Deaux Pinot Noir Reserve. Since the Pinot Noir is a net item, you will still pay the Case One price for it, but since you bought a total of five cases, the four cases of Chardonnay will receive the FP discount.

                OK, 25 cases is a lot for a restaurant with limited storage capacity. Some companies will offer restaurants a "special" FP of 5%/3cs, 10%/5cs., 15%/10cs.

                Then, there are also Stand Alone (SA) discounts. Buy five cases of the 2010 Chateau Cache Phloe Cabernet Sauvignon and -- for example -- instead of the 5% FP discount, get an SA discount of 10%; buy 10 cases and get an SA discount of 15%. Not every wine will have an SA discount available.

                Some wholesalers will offer SA discounts that are entitled "By-the-Glass" programs. Obviously these are applicable only to on-sale accounts (restaurants and bars). Typically these are cumulative. You might get (for example) a 25% discount on a pallet (56 cases), but the restaurant might only take the wine in "five case drops." They will take five cases, and five cases, and five -- until the entire palate has been delivered.

                Some larger wholesaler will also offer Brand Discounts -- all the wines from a single producer (or a single importer) -- will combine for a discount that is generally better than the FP discounts, but not as good as the SA discount (if there is one).

                Separate and apart from discounts are "post-offs." These are temporary price reductions in the "Case One" price, and are usually quoted in dollars, rather that in a percentage, say "$10 dollars off for June and July"; "$60 off for November and December"; and so on. These are price reductions right off the top, and FP/SA discounts would apply based on the "post-off price" (instead of the "Case One" price).

                Hope that helps . . . .

                Cheers,
                Jason

                1. re: zin1953

                  It's the SA "By-the-glass"" discount that I was referring to, for the most part, in relation to restaurants getting best pricing. But I'm just sayin'..........I have been able to get better case one prices, in some situations, because I have a tasting bar in my shop and one of my two licenses is an onsale license. In one specific case it's based on a special 5-case family plan setup. Sometimes, though, it's not a discount but simply the ability to buy a wine that would not be sold to me if I didn't have the onsale license.

                  1. re: Midlife

                    Exactly! There are some wines that are available ONLY to on-sale accounts. Use the right license, and you can get it! ;^)

                    Cheers,
                    Jason