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Another restaurant wine pricing rant!

Am I wrong to be upset when I go to a nice, but certainly not special occasion or Michelin starred restaurant, and can find no wine on the list for less than $50? We had dinner last evening at Fig & Olive, a nice French/Mediterranean restaurant in Newport Beach, CA. The least expensive bottles of wine on their list was $50, and there were only a few (2 or 3) token bottles on the list at this price. The average wine price was much higher. Now, I certainly don't mind spending $50 or considerably more for a bottle of wine when I'm celebrating something special or eating at a truly fine restaurant, but when I go out for a simple weeknight dinner, I want to spend less. I absolutely know that there are many decent to very good wines that I can buy at retail for $15-20, so surely these should be available wholesale to restaurants for $10-15. Even with a 3X markup, such wines should be easily sold for a nice profit at $40, or even less. Many restaurants in our area have decent wines available for this price, but not Fig & Olive. We noted that there were very few tables in this busy restaurant that had bottles of wine on the table. Does it not make financial sense for restaurants to have wines available at a range of prices, down to $35-40 or so? I can't believe that the increased sales of more moderately priced wines wouldn't likely increase the profitability of the wine program at restaurants such as Fig & Olive. Am I wrong?

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  1. I just went and looked at the Fig & Olive website. Looks like a pretty nice restaurant to me.

    2 Replies
    1. re: jpc8015

      It is a very nice, but not really special restaurant. I don't believe that there is another restaurant in our area that doesn't have at least a few bottles in the $40 range.

      1. re: jpc8015

        It's a chain. The one near me is awful.

      2. I don't think you're wrong. But that may be the reality of the area-I don't know. I either wouldn't go back or see what it would cost to bring in my own bottle(s).

        1 Reply
        1. re: HoosierFoodie

          Their corkage is $25. Next time I go to F & O I will definitely bring a bottle! My other question...noting that their wine offerings at the lower end are much more limited than their competition, is it not likely that their wine program profit overall would be greater if they had a larger selection of less expensive wines...say something like "40 @ $40"?

        2. The accepted minimum formula to mark up alcohol and food is 4x, so you've answered your own question. The restaurant you mention may not believe there are any wines in price range you seek that compliments their menu.

          75 Replies
          1. re: fourunder

            "The accepted minimum formula to mark up alcohol and food is 4x". Where does that come from?

              1. re: fourunder

                What math? Here in DC a 2.5X markup on lower priced wines and 1.75X on higher priced wines is not uncommon. Very few restaurants, regardless of how "high end" they are can sustain a 4X markup on wines, there is too much competition from the other restaurants with reasonable wine list prices.

                1. re: dinwiddie

                  I agree. 4X markup would be obscene. My local high-end restaurant probably marks up closer to 2x-2.5x. For example Rombauer's Chardonnay which I can have in retail for around $33 they offer at $68.

                  1. re: dinwiddie

                    Just because you can sell more wine in one restaurant at a lower price and make the same profit over time does not mean the same formula you have outlined works best for a smaller restaurant, that does not have as great a volume of customers or sales...nor the ability to restock the same wines in inventory. It may work fine for a bottle of ordinary wine, but not for exceptional wines, thus the general formal to get their return on investment. Just because the newer trend is to offer low priced wine is more common at the mark-up you have indicated doesn't make the accepted normal guideline for mark-ups to see a return invalid. Some restaurants really do not want to offer wine service, or they like to have the illusion of a wine list. It's no secret the profit on soft beverages, hard liquor and bottle water are actually preferred, rather than to offer wine at a reduced price point which jeopardizes sales of other beverages that bring in quicker and easier realized profits to the restaurant, without the same cost to stock a wine inventory.

                    last, retail is not wholesale...and the old formula of double plus a dollar nor longer applies either.

                    Ask an accountant.

                    1. re: fourunder

                      Oh, where to start . . .

                      a) Retail actually *is* wholesale in some states.

                      b) Again, "accepted normal guideline" -- accepted by whom? Is there some sort of internationally recognized standard that no one's told me about? Did the NRA (National Restaurant Association) pass some sort of membership guideline? I mean -- seriously . . .

                      c) "Just because the newer trend . . . " What "new trend"? In the 1970s and '80s, we marked up EVERYTHING on our wine list -- all 200+ wines, from Domaine Chandon Blanc de Noirs, Ridge Petite Sirah, and Château Potensac to Dom Pérignon, Château de Beaucastel, and Opus One -- a flat $5 over suggested retail. On the other hand I've also worked with restaurants that used a flat 3x wholesale formula, and ones which used a variable model. But never in 40 years of being int he trade have I ever seen anyone use a 4x *anything* model, and you still haven't said whether it's 4x wholesale or 4x retail or what . . .

                      1. re: zin1953

                        http://online.wsj.com/news/articles/S...

                        plus, jp also gave you similar information from Marriott and Fig & Olive prices the same....I don't need to tell you anything just because you haven't heard it....the formula exists.

                        Places the would charge a flat $5 for Opus.....it's called *Out of Stock*

                        You are certainly free to charge whatever you want.

                        let me help you out and highlight what is referenced in the article, just so there's no confusion:

                        *An inexpensive bottle might be priced three to four times its wholesale cost, while a pricey wine may be marked up only 1.5 times. This so-called progressive markup helps sell more expensive wines.*

                        1. re: fourunder

                          We can certainly agree to disagree, but for the record, I will tell you that nowhere in Jacob (jpc8015) say anything about a 4x markup. He FACTUALLY stated the overall budgeted pour cost was 25 percent -- how it was achieved was up to the specific location.

                          As for Fig & Olive, Jacob clearly wrote, "I ***imagine*** (emphasis added) that Fig & Olive has a similar policy in their main office and then lets each location figure out how they are going to achieve that end." How does *imaging* translate to factually knowing? And even so -- I suspect Jacob is correct; it's how most corporate entries run: set a target, then stand back -- it's not anything like a, "accepted standard formula (of) 4x" cost or suggested retail.

                          Actually I would imagine restaurants everywhere hope to place "Out of Stock" on EVERY wine on their wine list at some point or another, or do you know people who are actually saving that last bottle of 1980 Santa Barbara Chardonnay for that special occasion? Even Bern's Steakhouse in Tampa wants to sell out . . .

                          That said, we were rarely out-of-stock of Opus. We'd just order more; the wholesaler always had plenty . . . or we moved onto the next vintage. No big deal . . .

                      2. re: fourunder

                        Ok, now I get it. I can understand why a restaurant owner would rather make the profit on a coke, or a martini, or a bottle of water, rather than say $40 on a bottle of wine. Plus, you don't have your waitstaff wasting time pulling those pesky corks.

                        1. re: pinotho

                          A Martini in my neck of the woods is typically $15+. A bottle of beer is $6+ . Water is $$7.50+ and an Iced Tea/Soda is $2.50+. The average markup is actually over 600% for many full service restaurants.

                          1. re: fourunder

                            not be a smartass, but you bank dollars, not percentages. You have to sell a lot of soda/water/liqour to equal the dollar profit earned on one premium bottle of wine.

                            1. re: pinotho

                              Four martinis at a four top.....$60. A bottle of wine as suggested @ $40.....I understand cash flow and volume.....and the 80/20 rule.

                              1. re: fourunder

                                yet you failed to run the numbers on water and soda.

                              2. re: pinotho

                                True! And you can have all the great (high) markups on your wine list you want, but if the wines don't sell . . .

                                1. re: zin1953

                                  I remember once being very proud of myself that I had sold a $1200 bottle of wine.
                                  My boss smirked at me and told me he would prefer me to sell the cheap plonk house wine - the margin on it was far better.

                                  1. re: cronker

                                    To repeat the point made above... You bank dollars, not percentages. If your boss would prefer to bank $100 on a $300 bottle as opposed to $200 on that $1200 bottle he must know something that had eluded me in 40+ years in the consumer products and retail industries.

                                    That said, there is also the issue of inventory turnover and carrying cost. If the $1200 bottle sits gathering dust for a year before selling, while the $300 bottle sells in two weeks, that changes the whole discussion. Back in the late 70s borrowing money for inventory cost around 17 or 18%. You can easily see how that was different.

                                    1. re: Midlife

                                      Yes, and you can add a fixed number to all your wholesale prices and predict per/cover revenue with more certainty than futzing with percentages.

                                      1. re: BoneAppetite

                                        um, no. Adding $1 onto a soft drink will create a profit margin approaching and possibly exceeding 100%.

                                        Adding $1 onto a bottle of wine means you're not making squat for profit.

                                        Percentages work.

                      3. re: fourunder

                        That's not an answer. Many successful restaurants do not use that formula. Especially not across the boards.

                        1. re: ChefJune

                          True, but I've given up getting answers . . . .

                          1. re: zin1953

                            A simple Google search will provide you the answers.

                            http://smallbusiness.chron.com/price-...

                            From the article....

                            Step 5

                            Multiply the liquor cost by four or five to establish the price of the drink. Again, the amount of profit you desire for each drink is determined by you as a bar owner or manager

                            http://online.wsj.com/news/articles/S...

                            From the article....

                            Boiled down, there's a simple rule of restaurant finances that explains all this -- and can help you eat more for your dining dollar. Call it the 300% solution. Many independently owned restaurants, from the fanciest boite in Boston to a barbecue joint in Dallas, aim for an overall food markup of 300% -- or four times -- the cost of the raw ingredients. (Any less, and the restaurant might not turn a profit, food consultants say.)

                            1. re: fourunder

                              It's not a question of a "simple Google search." It's the problem of saying, in effect, it's my way or the highway - I'm right, and everyone else doesn't know what they are talking about.

                              I have no idea what experience you do or do not have, but I presume that you have some experience in either the wine & spirits trade or the food & beverage trade, and therefore know something of which you speak. I have been working in the wine & spirits trade since 1969, which doesn't for a moment suggest that I know EVERYthing, but it does mean I know SOMEthing. And I am not the only professional on these pages.

                              Few places I have worked either for or with have run by so strict a formula as you have stated. Even the examples you point to as with Jacob aren't as strict as you imply. The corporate powers-that-be set a target, but leave it to each location as to how to achieve it. That said, YMMV, and perhaps every establishment you have been employed by *does* follow such a strict formula.

                              But POTENTIAL profits on the page are not the same as REALIZED profits in the bank. And while I understand that some establishments feel compelled to have some window-dressing, other places see it as a useless waste of tight financial resources.

                              In order to make the profit, you have to sell the wine.

                              You keep going back to food markups. And I will simply tell you that in all my years of experience, I have never seen a restaurant use the same margins across the board. Margins are *always* different for breakfast than they are for lunch or for dinner. Markups are always different for draught beer than for bottled beer; different for cocktails than for the wine list.

                              1. re: zin1953

                                You keep misrepresenting what I have said .....and made up things I have not said.

                                *You keep going back to food markups*

                                What about the chron.com source. You asked and I provided you reliable sources that confirm what I have said. As I said, you can price your menu anyway you want. I'll choose the route that follows sound financial guidelines.

                                btw...sorry, but I don't really like to boast or name drop. It's not my style.

                                1. re: fourunder

                                  I'm sorry that you think I am misrepresenting you. I wish you could cite specific examples of where I've done that, or why I have "made up things [you] have not said."

                                  You *were* citing food markups, unless someone else edited your post. Did you *not* say/write " . . . aim for an overall food markup of 300% -- or four times -- the cost of the raw ingredients"??? If not you, who did?

                                  I didn't bother to deal with the chron link -- clearly a mistake -- because it's off-topic. The article is entitled "How to Price Bar Drinks." Indeed, the word "wine" isn't mentioned once in the piece you linked to. Cocktails and bar drinks are, and always have been, marked up differently (providing the establishment with a different BGP or NGP percentage) than wine lists. BTG wines are also marked up differently than wine lists.

                                  We have been talking about wine lists. The OP was "ranting" about a wine list, not about the cost of entrées, or appetizers; not about the cost of a Martini or an Iced Tea or a glass of bubbly but a wine list, as in the title of this thread:

                                  >>> Another restaurant wine pricing rant! <<<
                                  and
                                  >>> Am I wrong to be upset when I go to a nice, but certainly not special occasion or Michelin starred restaurant, and can find no wine on the list for less than $50? <<<

                                  I'm still confused as to where the Op was talking about the cost of food or of distilled spirits vis-a-vis the prices on the menu . . .

                          2. re: ChefJune

                            You're right. They actually markup higher. If math is not an answer, how else would you figure cost and markup extensions to figure out what is necessary to realize a profit?

                      4. re: fourunder

                        Accepted where? Accepted how? Are you marking up from WSRP, from case one wholesale, or from actual cost?

                        What may be the "norm" in New Jersey may *not* be the norm in California, or Washington, or Illinois, or Hawai'i or . . . .

                        1. re: zin1953

                          When I worked for Marriott our corporate offices budgeted for a 25% pour cost one liquor, beer, and wine. This wasn't a difficult thing to do for liquor and draft beer. Wine was a bit more tricky.

                          At our location we charged a much higher mark up for the lower end and glass wines. Then the premium bottles were sold at between 150-200 percent of cost.

                          I imagine that Fig & Olive has a similar policy in their main office then lets each location figure out how they are going to achieve that end. Consequently, you see the lower end bottles going for much more than you would expect when compared to retail.

                          1. re: jpc8015

                            Exactly. And this is why we have "on premise" labels, usually as house pour.
                            These wines are not available in retail outlets, so no one knows that the $25 bottle of house red actually costs us about $3 wholesale.

                              1. re: jpc8015

                                . . . and when you're a large corporation, you can easily do that. Small independent restaurants have a difficult time buying enough wine to create a unique proprietary "house label" -- unless one goes the "William Wycliffe" route.

                                Alternatively, you can just do away with a "House Red" and "House White," serving wines BTG or on tap.

                                But when you *are* a Marriott or other large corporation (with lots of catering events), or a restaurant chain, having proprietary house labels makes perfect sense.

                                1. re: zin1953

                                  I agree 100%. Obviously Marriott is huge and can afford the huge up front cost of putting their own label on a wine. They then mark it up sky high to help meet that 25% pour cost.

                                  Grandpa Joe's Steak House obviously can't do this and they probably aren't hitting a 25% pour cost on wine either. Two different business models, both can be successful.

                              2. re: cronker

                                My math is bad...the $3 bottle wine selling for $25 is marked up how many times.

                                1. re: fourunder

                                  While I've personally never found "markup" to be the key (I was taught to always look at the BGP, Beginning Gross Profit), let's see . . . uh, 32, carry the 1 . . .

                                  $3 cost is marked up roughly 8.333... times to get a price of $25 (833.3334%), translating to a Beginning Gross Profit of 88.00%.

                                  1. re: zin1953

                                    It's actually 7.3. You subtract the cost of the item

                                    1. re: fourunder

                                      Sure glad I initiated this thread. I'd love to see more posts addressing the questions I asked rather than....

                                      1. re: josephnl

                                        You opened a discussion with a large community of people, with differing views, ears and voices. They are perfectly allowed to discuss as they see fit.

                                        Try asking a religious or political question in a group of ten around your table and see how long it stays within your guidelines.

                                        1. re: josephnl

                                          What's your gripe. You asked what was reasonable or not on a wine list. You got your replies. I gave you the reason why your $10-15 bottle of wine at cost was marked up to $50. We can all wish for some things we like at restaurants to have....it doesn't mean you're going to get them. Expecting to to control content on this thread. Hit the Flag box.

                                          And for the record, the post you referenced explains mark up...which deals with your OP

                                          1. re: josephnl

                                            Joseph, I am truly sorry if you feel your question wasn't addressed. I apologize. I thought I responded to your post when I agreed with "pinotho" in his post re: restaurant pricing.

                                            To respond directly, I think the wine list overall has some very good wines on it. It's not the wine list that *I* would put together -- I would put more options in the $40-50 range -- but I can't complain too much about the list overall. Some wines specifically are overpriced, IMHO (that is, the markup may be higher than I would use), but overall it's not excessive AND paying corkage is always an option . . . as long as what you bring isn't already on the list.

                                            OTOH, "thread drift" is a common occurrence in conversations like this, and I wouldn't get bent out of shape over it.

                                            Jason

                                            1. re: zin1953

                                              Thanks for your kind and thoughtful response, Zin.

                                              Wow...I was not "bent out of shape" by the drift of this thread, but I must admit I'm always shocked by the level of anger and outrage occasionally shown by CH's on this site!

                                              1. re: josephnl

                                                There is no anger or outrage, except (apparently) by Chowhound moderators, who deleted my original, more thoughtful reply to this in less than 30 minutes . . . which may be a new record!

                                                1. re: zin1953

                                                  We tried to touch base with you about this over email, but haven't heard back, so we're not sure if you've received our email. We haven't deleted any posts (from you or anyone else) from this thread.

                                                  1. re: The Chowhound Team

                                                    Yes . . . and I emailed a reply to you at 10:34am. You posted the above at approx. 11:30, one hour *after* my reply to you . . . which is neither here nor there, I suppose, if we chalk it up to internet gremlins (rather than Chowhound mods).

                                                    1. re: zin1953

                                                      Odd, that email didn't come through on our end either. The gremlins must really dislike this topic!

                                                      1. re: The Chowhound Team

                                                        Re: zin1953 - Note from Chowhound
                                                        Sep 04, 2014, at 10:34 AM
                                                        From
                                                        Jason Brandt Lewis
                                                        To
                                                        moderators@chowhound.com

                                                        I posted a four paragraph reply to "josephnl," complete with a link to a YouTube video. I then posted to "fourunder," and noticed that my post to josephnl had disappeared . . .

                                                        On Sep 04, 2014, at 08:13 AM, moderators@chowhound.com wrote:

                                                        Hi, We're seeing no deletions at all in this thread. We saw a response from you to fourunder about the same time as this one, but nothing to josephnl. See what you think? Let us know. Mimi

                                                        The Chowhound Team
                                                        Chowhound.com
                                                        For Those Who Live to Eat
                                                        __________________

                                                        Discussion: Another restaurant wine pricing rant!

                                              1. re: BoneAppetite

                                                I always forget some people don't know about Passionfish . . .

                                                1. re: BoneAppetite

                                                  Wait, so it's a win / win for the restaurant and the customer? I'm unfamiliar with this concept.

                                                  1. re: JAB

                                                    Don't know what you're unfamiliar with . . .

                                                    Is it more important to have a "fancy" wine list filled with great bottles at high prices? Or is it more important for those bottles to actually SELL so that the restaurant can make a profit from the sale and stay in business?

                                                    A narrower profit margin makes the wines AFFORDABLE for the customers to purchase, so they can actually buy them.

                                                    If that's not a win/win, what is?

                                                    1. re: zin1953

                                                      The sale of two sodas and two coffees.

                                                      1. re: zin1953

                                                        Jason, turn up your sarcasm meter.

                                                        1. re: JAB

                                                          I really need to wait until I've had coffee before I post... ;^)

                                                    2. re: BoneAppetite

                                                      And another approach from soon to open Zola in Palo Alto...

                                                      "Corkage is $20 - a corkage fee is waived for each bottle purchased from our list or if the bottle is over 10 years old."

                                                        1. re: JAB

                                                          Presumably nothing on their list is 10+ years old, and they figure a) no conflict, and b) you're seriously into wine if you have something this old . . .

                                                          1. re: zin1953

                                                            Right, are you aware of others with this type of stated policy?

                                                            1. re: JAB

                                                              Yes. I have seen other restaurants which clearly state on their wine lists that 1) corkage is waived for a bottle purchased, and 2) you cannot bring something that is already on their list.

                                                              Far more restaurants follow the first part but without so stating on their list. As for #2, while that doesn't specifically state "10 years," I can virtually guarantee that Zola won't let you open a bottle that *is* on their list. I do not know of a single restaurant that will permit that, even though some will put it in black-and-white and others don't. (Indeed, most don't.) What Zola is telling *me* is that they don't have any wines over 10 years of age.

                                                              1. re: zin1953

                                                                Yes, I was referring to the free corkage because of the age of the bottle.

                                                                1. re: zin1953

                                                                  Actually many, if not most, restaurants in the Napa Valley will open for corkage a bottle that is on their wine list. After a day of visiting wineries in the Valley, we bring a bottle or two of our purchases to our favorite restaurants. More than once I've been personally embarrassed to notice the identical wine on the restaurant's list, but never has the restaurant either said anything nor refused to open it.

                                                                  1. re: josephnl

                                                                    They may do it but it is most polite for you not to ask them.

                                                                    1. re: jpc8015

                                                                      Yeah, I've never seen any place that did that, and I've been living in and out of Napa since 1971 . . . I'm not saying it's never happened; only that I've never, ever seen it. Indeed, I've actually seen the contrary take place!

                                                                      1. re: jpc8015

                                                                        jpc, I agree with you and would never knowingly do so.

                                                    3. re: zin1953

                                                      It may be part semantics, and methodologies do vary but I have 40 years in US retail that say Zin is right and you're wrong. 7x may be what textbooks call "mark ON", but $3 dollars is marked UP 8.x times to get to $25. Just sayin'.

                                                      1. re: Midlife

                                                        Yes, well, you and I know it's an 8.-- markup, but this is only ONE reason why markups are not what you use, but BGP . . . and, to paraphrase that old Winston commercial, It's what in the bank that counts! ;^) Ah, well, who am I to complain when I've domed on a beautiful brined pork chop, a great salad, and a wonderful bottle of Rioja?

                                                        Cheers,
                                                        Jason

                                                        1. re: Midlife

                                                          http://simplesmallbiz.com/2011/11/und...

                                                          This would suggest otherwise.... from the website

                                                          Let’s explain in simple terms.

                                                          Say you bought an item for $50 and could sell it for $100, doubling your money.
                                                          In this case your markup would be (the difference between selling price and cost price) divided by the cost of the item and multiplied by 100 to bring it to a percentage.

                                                          ie ($100 – $50) = $50(difference). $50(difference) / $50(cost) = 1 x 100 = 100% (here “/” stands for divide

                                                          )

                                                          Your markup was then 100%.

                                                          The same formula is listed both links to determine markup...so I'll stick with my method, which are actual accounting procedures .

                                                          http://www.accountingcoach.com/blog/g...

                                                          http://smallbusiness.chron.com/work-o...

                                                          With regards to *Markon* that's the difference between the Selling price and Cost of item, no?

                                                            1. re: fourunder

                                                              Well, as your own source says:

                                                              "Markup is used several ways. Some retailers use markup to mean the difference between a product's cost and its selling price. In our example, the product had a cost of $8 and it had a markup of $2 resulting in a selling price of $10. The $2 markup is the same as the $2 gross profit. However, the markup percentage is often expressed as a percentage of cost. In our example the $2 markup is divided by the cost of $8 resulting in a markup of 25%. (Some retailers may use the term markup to mean the increase in the original selling. For example, if the $10 selling price was increased to $11 because of high demand and limited supply, they would say the markup was $1.)"

                                                              1. re: Midlife

                                                                Markon is the difference between the selling price and cost, no? Or in the example of the $25 bottle of wine which costs $3....is 22, not 7.3

                                                              2. re: fourunder

                                                                >>> Let’s explain in simple terms.

                                                                Say you bought an item for $50 and could sell it for $100, doubling your money . . . <<<

                                                                And that's called "keystone," and is (was) the standard in the generalized world of retail trade, from gift shops to card shops, but it never applied to wine & spirits, to supermarkets¹, or to bookstores.

                                                                Standard *retail* markup in the wine business was a 50% markup for a 33.3% (beginning gross) profit. That is, a wine which carried a case one wholesale² of $120/cs., or $10/btl., would be sold for $15 at retail.

                                                                $10 + 50% markup ($5) = $15
                                                                $15 - $10 = $5 profit, or 33.3% of the selling price.

                                                                Although the cost of alcohol sold to restaurants in some states is actually retail, *generally* restaurants (in states without state ownership/control of the distribution channel) will start out with the same case one wholesale that retailer stores do. Markups have traditionally been made off of case one wholesale (the $10 example above), but increasingly over recent years, markups were taken off of the suggested retail price (the $15 price tag above).

                                                                But when people speak of a bottle on a wine list as being (e.g.) 3x retail -- or, to continue this analogy, $45 on the list, the actual profit margin is higher as it doesn't take into account the "built-in" profit of switching to the retail price . . .

                                                                $15 x 3 = $45
                                                                $45 - $15 = $30 profit, or 66.667% of the selling price

                                                                HOWEVER, the restaurant actually only paid $10, so . . .
                                                                $10 + 350% markup ($35) = $45.
                                                                $45 - $10 = $35 profit, or 77.778% of the selling price.

                                                                Cheers,
                                                                Jason

                                                                _______________
                                                                ¹ Except when it came to their gift items and accessories, such as barbecue mitts, decorative mugs, or HABA (Health and Beauty Aids).

                                                                ² For those not in the trade, "case one wholesale" refers to the price of a case of wine or spirits absent any discounts or price reductions of any kind.

                                                                1. re: zin1953

                                                                  What makes these discussions so difficult, as I found over the years, is that different people, companies, industries use slightly different names for the ways they discuss and calculate pricing formulas (or us it formulae). Gross profit (the dollars and cents over and above cost) is probably the only real number to be concerned about. We called it gross margin or markup at the two major retailers I worked for. Later, as a manufacturer/wholesaler, we'd use the same term because our customers did. Later, a bit of research revealed that not everyone used the same terms.

                                                                  The only thing that ever made real sense was the dollars you netted after the sale.

                                                                  1. re: Midlife

                                                                    but it is perfectly acceptable -- and some would argue highly recommended -- to aim for a set percentage of profit on everything that you sell, whether that's goods or services.

                                                                    1. re: sunshine842

                                                                      (Continuing to send this discussion farther afield . . . . )

                                                                      "Aiming at set percentages" has only worked, in my experience, in non-alcoholic retail (i.e.: we marked up everything by 100% ["keystone"] in a gift shop I used to work at). And while I agree that "aiming" implies a bit more flexibility than actually "setting a fixed percentage," I think the key in today's alcoholic beverage market *is* flexibility. Whether it's retail wine/spirits sales, in a cocktail bar, or on a restaurant's wine list, certain items have more "room" for a greater (potential) profit margin than others.

                                                                      1. re: zin1953

                                                                        of course...but "aiming" for (pulling a number out of mid-air) a 40% profit is going to be a *whole* lot more profitable than aiming for (another number from nowhere) a $2 per item profit.

                                                                        the manufacturing, wholesale, and retail industries don't make 28.293% profit on everything they sell, either. One item might be a 20% item, but another item might average 40%...

                                                                        1. re: sunshine842

                                                                          I think you have misunderstood the "$2" part. (Or, perhaps I have; at this point, who knows!) The only time I have *ever* marked up a price by a flat dollar amount was at one restaurant where the wine list was the "standard" suggested retail price + $5. So, that proverbial bottle of wine that cost $10 and had a suggested retail of $15 was on our wine list for $20. But the bottle that cost $50 would be $80 on our list (the suggested retail was $75). The bottle that cost $100 would be $155 on our list, and so on.

                                                                          The restaurant made 33% + $5 on every bottle. It *also* made the more expensive bottles the best values on the list.

                                                                          I have *never* worked in any establishment that had a policy of adding $x to the cost of every item to obtain the selling price. You calculate the sales price on a percentage, but you don't bank that percentage, you bank the actual dollars. So we actually sold that $155 bottle, instead of having it sit on our list for $300-450 and collecting dust.

                                                                          1. re: zin1953

                                                                            oh, the adding a flat dollar amount was referring back to a comment from BoneAppetite yesterday.

                                                                            You and I are on the same page with percentages.

                                                                    2. re: Midlife

                                                                      But it's not gross profit that you bank. It's net profit.

                                                  2. Your rant is justified, not because they don't have anything under $50, but because the wines they sell are so highly marked up that it is obscene. For example, the Barone Fini Valdadige, 2012 is priced at $58. It can be obtained at retail for about $10-12. Domaine de la Tonnellerie Sancerre is priced at $66, average retail $22 (and sometiemes as low as $16) 2011 Duckhorn Merlot (one assumes the Napa Valley) listed at $130, average retail $50. And remember that restaurants pay way less than retail.

                                                    That said, this is a chain that is out of New York City (4 restaurants there, one in Chicago, another in Hollywood.) and the Newport Beach restaurant does have some wines that are very difficult to find here on the East Coast (such as the Lorings)

                                                    But it is a chain that tries to be "upper end" and they have a wine list that tries to say just that with its pricing.

                                                    1. Having looked at the menu for this chain, I consider it pretty high end and think the wine list is going to match that. And fourunder has given the markup. But you can see the wines by the glass prices on their website and figure it out pretty quickly. It's the truly, almost never happen, rare occasion that I would go to any restaurant without checking out the prices. Caveat emptor...or did someone already say that :)

                                                      1. I wouldn't get upset about it. My favourite higher end restaurant that I love has $40 as their least expensive bottle. Is $40 OK but $50 too high? I don't think so. If you want to spend less why don't you buy wine by a glass, I am sure some is available this way. I recently visited 2 single-star Michelin restaurants in my area and what made me 'upset' how overrated the food was, now when they tell me it is a Michelin rated restaurant I run in the opposite direction.

                                                        1 Reply
                                                        1. re: olasek

                                                          <If you want to spend less why don't you buy wine by a glass,>
                                                          That's fine and dandy if you only want one glass. but if your table is going to each have a glass or so, "by the glass" is always way more expensive than the same bottle!

                                                          I don't know the restaurant in question, but I do know that almost all restaurants mark up the bottow=m of their wine list much higher than the top. And that the best deal is never the lowest price bottle on the list. However, most diners don't know that, and many are looking for a bottle they consider affordable. Having that one $40 bottle on the list might be a draw to entice diners to upgrade, as well -- giving still more options.

                                                        2. My take on this is to inquire about the wine list when making a reservation. Kinda similar to checking out the food menu, if food menu prices are absurdly overpriced or way beyond what we can afford, then we don't go

                                                          5 Replies
                                                          1. re: AlexBernardo

                                                            Fortunately here in California, most restaurants permit bringing wine for corkage, and with a very few obscene exceptions (places that charge $50-100 per bottle), most are pretty reasonable ~ $20-25 being most common. I guess when we run into ridiculous overpricing, bringing wine is what we'll do!

                                                            1. re: josephnl

                                                              never did respond to your original post, so, for what it's worth, I believe your rant is entirely justified.

                                                              1. re: josephnl

                                                                >> most restaurants permit bringing wine for corkage,

                                                                Some even waive corkage fee under some circumstances, I tend to look for such restaurants and patronize them, often they are the same places that have reasonable wine prices to begin with.

                                                                1. re: olasek

                                                                  We allow wines to be brought in with a corkage, the exception being that we do not allow you to bring in a wine that is on our list.
                                                                  Seems fair to me.

                                                                  1. re: cronker

                                                                    Which is exactly how it should be!

                                                            2. Josephnl, perhaps you would like to read this previous post abount wine pricing. If I recall correctly, at the end of the day, even the restaurant defenders admitted that they price wine so high because they know they can get away with it.
                                                              http://chowhound.chow.com/topics/410666 .

                                                              2 Replies
                                                              1. re: pinotho

                                                                Absolutely! Restaurants are entitled -- just as any business owner is entitled -- to charge whatever they wish . . . doesn't mean I have to be a patron, however. ;^)

                                                              2. Took a look at the dinner menu. To me it is not surprising that a restaurant that has entrees beginning at $26 (if I read correctly) would have a wine list substantially above $40 a bottle. Your per person food bill there is likely to be $40-$50 a person minimum. That and more for wine is not surprising to me. Actually, though, their $50 to $75 range is pretty slim as well, but their selections are largely quite good quality. Just my 2¢.

                                                                1. on the other hand, I sympathize with you. after looking at that wine list I want to tear it up. it's full of wines you can find in any supermarket. if i'm going to pay for an overpriced wine, i'd at least expect something that you won't readily find in mass market stores. that there was effort and expertise involved in putting the list together. sadly, a lot of corporate chains and hotel restaurants have this kind of list.

                                                                  for a night and day comparison, check out the wine list of Park Tavern or Cavalier in San Francisco, both restaurants owned by the same group

                                                                  2 Replies
                                                                  1. re: AlexBernardo

                                                                    Are you saying that these 2 restaurants are under the same ownership as Fig & Olive?

                                                                    1. re: josephnl

                                                                      No. I'm saying these two SF restos have the same owners.

                                                                  2. Looking on their web site, the least expensive white on the bottle list is Ragottière black label Muscadet for $50. That retails for $15 in California so the wholesale price is probably $10, so the markup is 5X.

                                                                    On the other hand, at the high end, the markup on the Sassicaia is 3X.

                                                                    I don't know about Newport Beach, but where I live there are lots of places where the markup is 3X on less expensive wines and as low as 1.5X on luxury / vintage wines.

                                                                    7 Replies
                                                                    1. re: Robert Lauriston

                                                                      But isn't 5x wholesale a truly obscene markup. Additionally though, aside from F & O, I really don't think there is another restaurant in Newport Beach that has absolutely no wine offering for less than $50...and I've lived in the area for many years and have looked at many wine lists This led to my op.. and I guess from now on if I choose to go to Fig & Olive, I'll bring my own bottle and pay the $25 corkage

                                                                      1. re: josephnl

                                                                        Well, as I said above, it's not a pricing formula I would use . . . and having nothing on the list <$50 is, IMHO, stupid. But . . . c'est la vie.

                                                                        1. re: josephnl

                                                                          There is a very easy fix for this. Don't eat at Fig & Olive if you are so horribly offended by their business model.

                                                                          1. re: jpc8015

                                                                            No, their food is pretty good...so, I'll bring my own wine in the future!

                                                                            1. re: josephnl

                                                                              And that is yet another option.

                                                                          2. re: josephnl

                                                                            A 3.5X markup is enough to put me off returning to a place, given how many places I go that keep it at 3X.

                                                                            I'm surprised they don't jack up the corkage to $40 to match the bottle pricing.

                                                                            1. re: josephnl

                                                                              <But isn't 5x wholesale a truly obscene markup.>

                                                                              I think so, but apparently they don't. Since there is no law regarding markups on wine lists, owners are free to charge whatever they can get. I probably wouldn't patronize this restaurant a second time, if it were me. I would prefer a better wine selection at fairer prices.

                                                                          3. That $50 wine was bought for 12.50 a bottle per case, probably less wholesale. You pay $20 retail and buy it for $50 at a restaurant. That and a $25 corkage fee is pure greed. Plain and simple.

                                                                            18 Replies
                                                                              1. re: jpc8015

                                                                                It's a matter of balance. Treating customers fairly and well is in the long run, pretty much always good business.

                                                                                1. re: josephnl

                                                                                  If you're going to go back and pay them $25.00 for the opportunity to open and pour your wine...then you feel like you are being treated fairly. Nobody is forcing you to buy their wine.

                                                                                  1. re: jpc8015

                                                                                    I'll probably go back on rare occasion and bring wine. OTOH if they had a good wine list that was fairly priced,I might well become a "regular" and visit often, and likely with guests. This will not happen.

                                                                                    1. re: josephnl

                                                                                      This is ALSO why I make it a point of talking to the sommelier and/or manager . . . of explaining WHY I would be back/won't be a regular . . .

                                                                                      I've had experiences where the manager has explained their point-of-view, and it's made no sense to me whatsoever, AND I've had times where the policy has been re-evaluated and changed - after which the manager/owner called me to invite me back!

                                                                                      1. re: zin1953

                                                                                        We've spoken to both managers and sommeliers on two occasions. Although they seem to be understanding, they fall back on the "it's corporate policy" defense.

                                                                                        1. re: josephnl

                                                                                          And I'm sure that's true. The times when I've seen a change in policy were definitely NOT corporate-owned establishments.

                                                                                          That said, when enough people complain about it . . .

                                                                                          1. re: zin1953

                                                                                            They seem not to care. There were very few tables with a bottle of wine. More folks were drinking cocktails or beer.

                                                                                            1. re: josephnl

                                                                                              And I'm sure that's also true. Again, you're dealing with a corporate entity . . . as long as the corporate bean counters are happy, there is no need to change; it is "successful."

                                                                                              1. re: josephnl

                                                                                                Cocktails typically have a higher profit margin than wine.

                                                                                            2. re: josephnl

                                                                                              I think the Fig & Olive chain started in NYC, where markups are higher.

                                                                                              1. re: Robert Lauriston

                                                                                                Markups are not necessarily higher in New York. And if that chain started here, I'm not sure where they are....

                                                                                                Sorry. Just looked them up. There are 3 in Manhattan. Good for them. I won't be seeking them out.

                                                                                                Interesting.... there is no mention of wine or any liquor on their menu on the web site.

                                                                                                Well, I found the wine/cocktail list. the link was in yellow at the bottom of the page? Nearly choked at the prices of most of the wines. Markup seems to be higher for California wines than (at least some of) the French wines on the list.

                                                                                                Personally, I can't imagine going to any of their Manhattan locations. I can think of places I'd rather revisit or try in all three locations.

                                                                                                1. re: ChefJune

                                                                                                  I don't know about other parts of California, but Drew Nieporent said New Yorkers will accept higher markups than San Franciscans.

                                                                                                  http://insidescoopsf.sfgate.com/blog/...

                                                                                                  1. re: Robert Lauriston

                                                                                                    Interesting article/interview. My favorite part was Michael Bauer's misspelling of "camaraderie."

                                                                                                    Interesting comment re wine markups.. yes, I think New Yorkers will, in general, but that doesn't mean restaurateurs (including Drew Nieporent) are looking to gouge their customers. Quite the opposite.

                                                                                                    In order to understand the pricing on a restaurant wine list, one pretty much needs to understand wine pricing across the board, as well as the fact that the lowest priced wines will have the largest markups.

                                                                                                    1. re: ChefJune

                                                                                                      >>> . . . as well as the fact that the lowest priced wines will have the largest markups. <<<

                                                                                                      Although a good general rule-of-thumb, that's often not true in the specific . . .

                                                                                                      1. re: ChefJune

                                                                                                        "as well as the fact that the lowest priced wines will have the largest markups."

                                                                                                        This is often true on food items as well. A bowl of pasta primavera selling for $14.95 may only have $3.50 (or less) worth of ingredients. This makes for a food cost of 23.4%. Compare that to the 20 oz. USDA prime bone in rib steak that is selling for a menu price of $55.00 but has a total of $17.00 dollars worth of ingredients on the plate for a food cost of 30.9%.

                                                                                                        Obviously the steak leads to a larger bottom line because more money is made on that item compared to the pasta.

                                                                                                        1. re: jpc8015

                                                                                                          Not necessarily -- only if they actually sell enough of the steak to offset the lower profit of the pasta.

                                                                                                          If, say, during tough times, people start eating more pasta and chicken, it won't matter how much margin there is on the steak -- you don't make money on what you sell, and you in fact lose your butt throwing away steaks that nobody ate.

                                                                                                          1. re: sunshine842

                                                                                                            Right. I meant that a single steak purchase earns more than a single pasta purchase. Unless we are talking about a steakhouse, most places will sell more pasta than steak. Just as most places will sell more bottles of their house wine than they will Nickel & Nickel.