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Restaurant mark-up on wine

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Recently I've noticed across-the-board obscene mark-ups on bottles of wine.

For example, last week I enjoyed a simple California zinfandel at a local restaurant that was $45. When I went to get a bottle at my local retail wine shop, it was $13.99.

Then I had an Argentinian malbec with my dinner later in the week, and the bottle was $55. At the store? $14.99.

I don't mind restaurants marking up wine even twice as much as a retail location - I understand the cost of storing, presenting, serving the wine, etc., and I also understand that many restaurants cannot buy in the bulk that some larger retailers can.

However, I feel that this is highway robbery. Frankly, I'm a little pissed that I paid $55 for a bottle of wine (add in the tip, and it's more like $65 or so) that I could buy at a store for $15. Remember, the store is making some profit selling the wine for $15.

What do you think is a fair mark-up on wine at a restaurant, and how can a patron combat "highway robbery" on the wine?

Thanks.

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  1. Lots of previous threads on this.

    1 Reply
    1. re: maria lorraine

      Agreed:
      http://chowhound.chow.com/topics/539517
      http://chowhound.chow.com/topics/527538
      http://chowhound.chow.com/topics/549322
      http://chowhound.chow.com/topics/545596
      http://chowhound.chow.com/topics/480627
      http://chowhound.chow.com/topics/478877
      . . . and these are all from just 2008!

      As well as:
      http://www.chow.com/stories/10888
      http://www.chow.com/stories/10464

    2. Just bring your own in depending on your state. In Minnesota it is legal to bring your own in but I know some states differ.

      I don't buy wine at restaurants as most have a terrbile selection to began with. Often times they let the distributor pick their list and the staff are not trained properly.

      1 Reply
      1. re: wineglas

        Just a point of clarification. While BYO is not illegal in Minnesota, restaurants have the option of whether or not they wish to allow BYO. If they do, they also have the option of charging whatever corkage fee, if any, they wish to charge.

      2. Here in Europe 250-300% mark up the the standard at mid to upper range restaurants. There better places mark up higher (I have seen as much as 500%) on lower priced wines and lower on the more expensive ones. I think this is fair as long as they offer a high standard of wine service. The cost of cellering a large selection of wines has to be considered as you say as does the expense of having trained sommelliers on the staff but more important to me is the glasswear. Good glasses and decanters cost money and breakage has to factored in whilst different wines need different glasses to be fully appreciated. What pisses me off as a consumer is when every day restaurants have a dumb waiter with no wine knowledge and one size of cheap standard glass but still mark up by 300% or more.

        1. Keep in mind too that wine stores with good prices are often charging just a little bit above the wholesale prices quoted to restaurants. They can do this because they buy in large volume while independent restaurants tend to buy by the case (or less).

          Specifically in Minneapolis, Hennepin Lake Liquors has some wines for $6 retail that the restaurant I am at buys wholesale for $5.50. All of their under $10 wines are just above wholesale. That store is only a few blocks from us and popular in the neighborhood so if we charge standard markup a lot of people think they are getting gouged.

          1. I find it interesting how everyone loves to complain about the concept of wine mark ups, focusing only on how much cheaper they can purchase wine for at a retailer. In order for a restaurant to sell wine they need a liquor license (really not cheap, thousands of dollars a year), they need to educate their staff on wine (training hours require paying wages), here in MN all of our servers and bartenders must attend a formal carding/overserving class in order for our insurance to cover them (the class requires hiring a licensed professional, plus paying all servers to attend). We have to wine storage, coolers, glassware, menus printed...the costs are endless. Bars and restaurants need to recoup these expenses just to stay in business. How do they do that? By adding a mark up to food and beverage, especially to wine/beer/liquor. Of course you can probably buy the same bottle cheaper somewhere else, in a free market you can always find something cheaper elsewhere. You are paying for the whole dining experience...if you don't want to do that stay home and enjoy your bargain on the couch!

            3 Replies
            1. re: run2eat

              Let's keep in mind, first of all, that there is a HUGE difference between restaurants like the Olive Garden, Outback, and your local sports bar/restaurant on the one hand, and high-end restaurants like the Slanted Door, Babbo, and Bayona (let alone places like Gary Danko, Joël Robuchon, and No. 9 Park), or even chains like Morton's Steak House -- both in terms of the care and effort put into the wine list AND in terms of staff training about the wine list . . .

              Secondly, remember that each state has laws and regulations that are different from every other state. For example, when you write:

              >>> In order for a restaurant to sell wine they need a liquor license (really not cheap, thousands of dollars a year <<<

              That is not necessarily true. Here in California, a new Type 41 On-Sale license (Beer & Wine Eating Place) costs $300 to obtain, and the 2009 renewal fee is $339. A new Type 42 (Beer & Wine Public Place) is $300 to obtain, but only $253 to renew for 2009. If one obtains an existing license, it costs $100 to transfer it into your name.

              HOWEVER, these license permit one to sell beer and wine ONLY. In order to have a full bar in a restaurant, you need to have a Type 47 On-Sale General license -- these cost $12,000 new, and cost between $622-$847 to renew. The number of licenses available is limited, however, so there are certainly times when one has to buy an existing license for more than the issue fee. To transfer an existing license to new ownership costs $1,250.

              See http://www.abc.ca.gov/permits/2009Fee...

              Third, while it is true that Minnesota mandates some training, not only is this NOT required in all states, but I guarantee you that the type of training you are mentioning has NOTHING to do with wine-and-good pairing, educating the staff about the wines on your list, etc., etc., etc. It focuses on how to card an individual (making sure they are of legal age), how to know when not to serve someone (when obviously drunk), and so on. This has nothing whatsoever to do with the kind of staff training we have been talking about (e.g.: a restaurant like Chez Panisse will spend more time educating their waitstaff on their wine list than will the Olive Garden -- in the case of the former, wines will be opened and paired with dishes; in the case of the latter, the wholesale rep will come in, open a bottle, tell then this goes great with pasta, and the one who sells the most bottles will get trip to Napa Valley!).

              Fourth, in many states, wholesalers will print the wine lists in exchange for the house wine and/or bar well. As for wine storage and glassware, this is no different than other establishments (both The Olive Garden AND the French Laundry have to store wine and buy glasses). Not only that, but some glassware companies have promotional deals to get the restaurant to use (e.g.) Riedel instead of Schott Zwiesel . . .

              Fifth, in MOST (but not all) states, restaurants pay the same price for the wine as does a retail store -- or rather, the 'case one" price (before any discounts are applied) are the same. Retail stores may get a cheaper price by placing a larger order (total number of cases) with the wholesaler than does the restaurant; but OTOH, restaurants may benefit from special pricing available only to on sale establishments.

              All of this is not to say restaurants are not justified in taking a markup . . .

              >>> Bars and restaurants need to recoup these expenses just to stay in business. How do they do that? By adding a mark up to food and beverage, especially to wine/beer/liquor. <<<

              . . . but the key to success -- at least in my restaurant experience -- is to take a markup that is reasonable.

              Within the restaurant business, in terms of food costs, typically breakfast is more profitable than lunch; lunch more profitable than dinner. In many cases, restaurants RELY on the markups provided by beverages -- yes, beer, wine and especially liquor (which has a much higher percentage markup than the wine list, typically), but ALSO on coffee, espresso drinks, tea, etc. -- for profits.

              I have not heard anyone EVER suggest that a restaurant was not entitled to make a profit. And the average customer/patron has NO IDEA what a bottle of ____________ costs wholesale. But can you not understand that when someone sees a bottle of ___________ for $50 at a retail store, and it's $150 on someone's wine list, it might seem excessive to them??? Let alone to two examples mentioned by the OP:

              >>> For example, last week I enjoyed a simple California zinfandel at a local restaurant that was $45. When I went to get a bottle at my local retail wine shop, it was $13.99. Then I had an Argentinian malbec with my dinner later in the week, and the bottle was $55. At the store? $14.99. <<<

              Or do you really, honestly want your customers to think

              >>> You are paying for the whole dining experience...if you don't want to do that stay home and enjoy your bargain on the couch! <<<

              Cheers,
              Jason

              1. re: zin1953

                No one seems to complain about a cup of coffee that costs a restaurant about 15-20 cents and is sold for $2.00 +............................

                1. re: TonyO

                  EXACTLY!!!

            2. what's with all the minnesotans on this wine thread?!? weird. well i'm a minnesotan too :)

              one of the biggest expenses associated with offering wine in restaurants (or any alcoholic beverage) are the licensing fees and increased insurance costs required in order to do so. especially in small establishments, this cost will be paid primarily by the customer who drinks the beverage-- wine markups will reflect these overhead costs.
              if you want restaurants to be able to offer any alcoholic beverages, well--pay to play!

              1. as jfood sits in the bar of the bloomington MN sheraton having his third straight bacon cheeseburger, he has to say he loves the idea of large mark ups on wine so long as it keeps his food bill reasonable. so he just paid $5 for about $1 of onion rings, and well worth it. How about $25 for a 4 oz piece of salmon at wholesale $4 per pound, or $4.50 for the squirter shooting some sweetened soda into a glass.

                If one compares the cost of an object against the variable cost of purchasing that object then they are far from apples and apples. As others have pointed out there are fixed costs to providing all aspects of the service. How about a restaurant performing a cost plus menu. Want to sit that's $2, a table will cost you $3, silverware, hold the knife since it's a burger, another $1.50. And want a menu, $0.50...

                How one combats perceived overpricing is simply order something else. Want to sit in a particular place and eat, gotta pay to play. And keep those prices up, still loving the $20 average price for short ribs jfood has eaten in Minnesota.

                1 Reply
                1. re: jfood

                  Last but not least. Lets not forget the financing cost of buying the wines. Especially, if the resto has an extensive list.
                  Plus, the restaurant business is not the most safest to get into. The majority do not make it so I do not think the markups are wrong. These businesses are not charities...