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Wine markups and pricing [moved from Boston board]

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[NOTE: We've moved this discussion from the thread at http://chowhound.chow.com/topics/673460 -- THE CHOWHOUND TEAM]

I haven't been to Central Bottle and I've been to the Butcher Shop only twice. However as a restaurant owner I'd like to throw my two cents into the discussion about wine and pricing, etc.

If you go to a restaurant and order a Coke, you are most likely going to be charged anywhere from $1.50-$3 or even more for a glass. Then you can walk outside and go to CVS and get a liter for about the same price. Why does this not elicit the same level of indignation? What you get when you go to a restaurant is an experience: to be waited on, to enjoy the atmosphere, to have the wine served to you in a glass that you don't have to wash after you're finished, to spend time with friends (or yourself). Food and bev typically make up 25-30% of a healthy restaurants costs. Which does translate to the customer paying for the 3-4x markup. Egregious? Not from my perspective where I'm paying a staff of people to make sure you have a good experience, rent that is typically up to 10% of revenue, insurance to make sure that if you choke on your wine I won't lose the house, glassware+tables+chairs, etc.. Plus, yes, at the end of the day I would love to pay myself something (after I've paid back my investors over anywhere from 2-8 years depending on how busy we are). Oh and did I mention healh insurance? I want to help pay for health for my employees - and by state law I'm obliged to - and this past year I've seen our health insurance costs creep -make that skyrocket- up almost double.

Not complaining. I love love love this business. I have lurked long enough on Chowhound to understand that this site is all about pointing out places that you might not otherwise have known about and I do appreciate that. Just wanted to try and explain from the other side of the coin. Thanks.

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  1. John, everyone on this site understands the predicament of restaurant owners and knows the necessities of the business.

    What we still do, however, is judge value.

    My problem is not with markups, they are a necessary part of any business. My problem is not getting what I think is a good value. This is especially true of the Butcher Shop, which has done a serious price creep from when it opened. It is also not a struggling business like most restaurants.

    If I am paying $17 per bottle retail, then the Butcher Shop is paying significantly less than that per bottle and then getting 4-5 glasses per bottle. The markup is at least 500%, which I am pretty sure is much higher than average. That's just not a good value in my book.

    If someone charged me $6 for a glass of Coke, I would be similarly upset.

    1 Reply
    1. re: DoubleMan

      DoubleMan- Point taken. Judging value is indeed what this thread is about and I guess from my point of view I see so many other things besides simply just the value of what you get at a restaurant. I hate to say it but your comment "it's also not a struggling business" probably does mean that the Butcher Shop can pretty much charge whatever they want. They don't seem to have an issue filling seats so the law of supply and demand tells them to go ahead and raise prices to the point that the consumer will bear. (Not all consumers but enough to keep them busy.) And you are right to point that out to other CH readers to make them aware of that. If someone wants to enjoy that glass in that atmosphere that much, they'll simply pay it. It''s like Sox tickets: if I want to sit in an upscale box I'm going to pay a premium. If I don't mind the bleachers I'll get cheap seats. We're all watching the same game. But my atmosphere and service and experience in the box will cost me more.
      (BTW I aim for 3.5-4 glasses per bottle. If I gave you 1/5 bottle at my restaurant you'd be writing here about my short pours!)

    2. If you are seriously asking this question i will try to answer it.

      A coke at $3 is about a 300% mark-up from a can at retail at 7-11. This does not horrify people because 1) 99% of places give you free refills, and 2) at the end of the day it's only $3.

      A $15 retail bottle of wine going for $45 is the same 300% mark-up. However, I feel like as an item increases in price the mark-up % should decrease somewhat. Overall, I think wine is the biggest rip-off in dining. Flame away, I know most disagree.

      1 Reply
      1. re: ac106

        No flame here. Look at the OP's points:

        >>Not from my perspective where I'm paying a staff of people to make sure you have a good experience, rent that is typically up to 10% of revenue, insurance to make sure that if you choke on your wine I won't lose the house, glassware+tables+chairs, etc..

        Now consider: when I dine at a restaurant ALL these costs (just add a few more glasses for the wine drinkers) are incurred whether I order a single $12 glass of wine, a $20 bottle of wine, a $300 bottle of wine, a $1000 bottle or NO wine at all. Since those costs - fixed overhead - do not vary by what I order, and still obtain even if I don't order ANY wine, they can't have that much to do with the subject of this thread: excessive wine mark-ups (unless non-wine drinkers are totally unprofitable for a restaurant?).

        Granted - and inarguable - there is a definite inventory cost to the owner in building up a decent wine cellar, and that should be taken into consideration (not sure how or whether that inventory cost can be amortized - anyone know?).

        Given that cost, I have absolutely no problem with a 100% mark-up (which is what I commonly found in restaurants in the rockies and southwest USA - sometimes less), and even a 200% mark-up doesn't seem totally out of line (more common on the east coast, where I live) - but IMO, anything above that is a rip, plain and simple, except perhaps for the highest end lists with genuine hard-to-find or generally unavailable rarities for which the sky's the limit, and which are way out of my range even at retail anyway :).

      2. Also, with the wine, you should get a better glass to drink from!

        Hunt

        1. And imagine if the salaries of your waitstaff weren't subsidized by tips from patrons.

          Thanks