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what is fair/acceptable restaurant markup? - 10/18/2023 12:33:58 AM

fanglangzhe

Posts: 374
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What do you think is a fair restaurant markup over retail for a bottle of wine? Let's say you can buy a bottle from your preferred retailer for $20, how much do you think is fair on a restaurant wine list for that same wine? At what price does it become unacceptable?

Post #: 1

RE: what is fair/acceptable restaurant markup? - 10/18/2023 3:14:40 AM

Paul852

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From: Hong Kong
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I think this is a bit market/country specific (particularly when you consider in conjunction with the absurd levels of tipping required in the USA which you really have to build in to the calculation). Personally, in Hong Kong (where "service" charges range from 0 to 10%), my threshold at which I say "too much" is when it goes over 3 times retail.

< Message edited by Paul852 -- 10/18/2023 3:15:35 AM >

(in reply to fanglangzhe)

Post #: 2

RE: what is fair/acceptable restaurant markup? - 10/18/2023 3:45:03 AM

Echinosum

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From: Buckinghamshire, UK
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You complain about the mark-up on wine. What about the mark-up on a cup of tea? That's far more outrageous.

If we were sensible, we'd plan in advance the overall costs of the dining experience we'd like to have, and decide whether that was acceptable as a whole, and stick to our plan. Because the restaurateur is also looking at the totality of what we will pay. But we sit there and allow ourselves to be taken slice by slice, because restaurant selling methods are a case study in that, and we feel used afterwards.

Restaurants are a case study both in

- the psychological techniques of marketing, as set out in the classic book Influence: The Psychology of Persuasion by Robert Cialdini, suitable for the educated layman, and
- the techniques of self-selective price discrimination. There's a classic layman's text that covers that too, which I read fairly recently, but I can't recall what it is just now. Here's a short web article that sets out the basics. Perhaps you don't really need to read a whole book on that.

But I do strongly recommend reading Cialdini's book. It is a revelation to most people. About 10 years ago someone recommended it to me, and it took me a few years to get around to it, I wish I had taken greater notice at the time. Cialdini usefully sets out how we should defend ourselves against falling for the marketers using sneaky methods to get more money out of us.

(in reply to Paul852)

Post #: 3

RE: what is fair/acceptable restaurant markup? - 10/18/2023 3:53:16 AM

dad300

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From: South Paris, Maine
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generally accepted markup is in the 250% to 300% over cost of the bottle. but lots of factors apply. is it a bottle that will sit for a long time in the establishments cellar? is it on the by the glass program as well? established consistent seller in the establishment. scarcity of allocation.

new bottles generally have a lower markup for a short period of time to induce people to try the bottle. long established selling bottles can have a higher markup due to the knowledge that its going to sell no matter the price. think KJ Chard at a chain, it will have a higher markup just because it can. finally by the glass bottles often carry a higher markup as the push is to get you to buy the glass. not the bottle.

additionally, in many areas the price that a on premise account buys a bottle or a case of wine for is very different than what a retail shop will pay at cost.

there is a very popular nv cabernet that i sold in my last position that sold to on premise accounts for 30% less by the bottle than what my retail accounts paid. if bought by the case it was closer to 60%. Using the 300% percent markup from retail shops for the bottle the markup was actually closer to 600%.

that being said i use the rule of three hundred percent when i go out as well.

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RE: what is fair/acceptable restaurant markup? - 10/18/2023 4:24:29 AM

jmcmchi

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quote:

ORIGINAL: Echinosum

You complain about the mark-up on wine. What about the mark-up on a cup of tea? That's far more outrageous.

True, so much so that my wife does not drink tea in restaurants

And thank you for the Cialdini reference

Further to Paul’s comment, you have to allow for paying a third more than the menu price for anything ina US restaurant

To the OP: even when dining on expense account, I avoided the obviously most profitable lines, just went for what seemed most reasonable in what was available in a given restaurant- accepting that the more upmarket it was, the more outrageous the pricing would be.
Now retired, I tend to go for restaurants that allow corkage or takeout given that the total cost from the winelist typically comes out to a minimum of 4x retail price - twice what I would consider a “fair” markup.
But then, I don’t have an insight into the business model(s) in the industry

Apart from that, unless travelling, I prefer to eat at home where I can control the waiting time (for a table, between courses, for the bill…), avoid worries about designated drivers and stress about appropriate tip levels, have my salad with a decent vinaigrette after the main course instead of as a starter….

End of rant

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Post #: 5

RE: what is fair/acceptable restaurant markup? - 10/18/2023 4:50:06 AM

Paul852

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quote:

ORIGINAL: dad300

generally accepted markup is in the 250% to 300% over cost of the bottle.

Just to be clear, if the retail cost is US$20, do you mean that the restaurant price is US$50-60, or US$70-80?

(in reply to dad300)

Post #: 6

RE: what is fair/acceptable restaurant markup? - 10/18/2023 5:32:00 AM

gruqqt@gmail.com

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Okay, about $20 Cabernet Sauvignon, Daou, neighborhood restaurant in SW Florida, typical pricing in town.
(6 oz glass) $13.95.

Say 5 glasses per bottle = $70 = $50 markup over wholesale price. If everyplace in town is doing the same, it must be acceptable, right. Rent, staff, glasses, etc. blah, blah. I'm happy for their success but I miss BYOB and it does not encourage eating out if you enjoy wine.

(in reply to fanglangzhe)

Post #: 7

RE: what is fair/acceptable restaurant markup? - 10/18/2023 5:39:35 AM

DoubleD1969

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quote:

ORIGINAL: Paul852

quote:

ORIGINAL: dad300

generally accepted markup is in the 250% to 300% over cost of the bottle.

Just to be clear, if the retail cost is US$20, do you mean that the restaurant price is US$50-60, or US$70-80?

Probably in between - $60 to $70. That’s common in many cities or towns in the US. Food is generally a zero profit segment where BYO laws don’t exist. If a restaurant wants to survive, especially in expensive cities like NYC where most establishments don’t own the space, non-food sales are crucial.

(in reply to Paul852)

Post #: 8

RE: what is fair/acceptable restaurant markup? - 10/18/2023 5:46:58 AM

KPB

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I'm with Paul. If I see a nice bottle -- for example the St. Cosme Gigondas, maybe even the basic one as opposed to the vineyard-designated bottlings, I tend to ask myself what the wine would cost me as a retail bottle and my threshold is around 3x.

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RE: what is fair/acceptable restaurant markup? - 10/18/2023 7:48:16 AM

BenG

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I went to Love Restaurant in Philly over the weekend. There was no BYOB and both Daou Cab Sav and Decoy Cab Sav were $90 a bottle each (normally around $20 retail). We did not buy a bottle there.

< Message edited by BenG -- 10/18/2023 7:49:02 AM >

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Post #: 10

RE: what is fair/acceptable restaurant markup? - 10/18/2023 8:03:13 AM

DrBad

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3x is about my limit but I usually can't get myself to pay $75 for $25 bottle of wine. I find that the % markup usually gets less the more expensive the bottle so a $50 bottle at $100-$125 is what I will sometimes look for if I want a nice bottle of wine.

(in reply to BenG)

Post #: 11

RE: what is fair/acceptable restaurant markup? - 10/18/2023 9:06:32 AM

Ralphs Bar

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quote:

ORIGINAL: DrBad

3x is about my limit but I usually can't get myself to pay $75 for $25 bottle of wine. I find that the % markup usually gets less the more expensive the bottle so a $50 bottle at $100-$125 is what I will sometimes look for if I want a nice bottle of wine.

I definitely find the same to be true, and at places with a thoughtful wine list there usually seems to be a gem or two in that middle price range.

I am always curious about the economics of restaurants like Wally's Wine & Sprits in Los Angeles, where their retail wine sales set bottle price and there is a fixed mark up on any bottle whether it's a $30 Shiraz or a $800 Bordeaux. It feels like a great deal, but their retail prices can be somewhat inflated.

(in reply to DrBad)

Post #: 12

RE: what is fair/acceptable restaurant markup? - 10/18/2023 9:17:58 AM

Eduardo787

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Mexico has a very high import tax on wines, but I have no idea who will order a Nickel and Nickel at the Tepanyaki restaurant here in the hotel ast $700 usd. I definitely understand 2 or 3 X the price, more that that is glutony on part of the restaurant. If they want to sell and move inventory the best thing they can do is have atractive prices.

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RE: what is fair/acceptable restaurant markup? - 10/18/2023 11:08:55 AM

MB1991

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quote:

ORIGINAL: DoubleD1969

quote:

ORIGINAL: Paul852

quote:

ORIGINAL: dad300

generally accepted markup is in the 250% to 300% over cost of the bottle.

Just to be clear, if the retail cost is US$20, do you mean that the restaurant price is US$50-60, or US$70-80?

Probably in between - $60 to $70. That’s common in many cities or towns in the US. Food is generally a zero profit segment where BYO laws don’t exist. If a restaurant wants to survive, especially in expensive cities like NYC where most establishments don’t own the space, non-food sales are crucial.

Sure, but at some point you deter sales on alcohol in general and start losing profit because you are trying to profit too much off of wine etc.

(in reply to DoubleD1969)

Post #: 14

RE: what is fair/acceptable restaurant markup? - 10/18/2023 11:23:31 AM

dad300

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quote:

ORIGINAL: gruqqt@gmail.com

Okay, about $20 Cabernet Sauvignon, Daou, neighborhood restaurant in SW Florida, typical pricing in town.
(6 oz glass) $13.95.

Say 5 glasses per bottle = $70 = $50 markup over wholesale price. If everyplace in town is doing the same, it must be acceptable, right. Rent, staff, glasses, etc. blah, blah. I'm happy for their success but I miss BYOB and it does not encourage eating out if you enjoy wine.

so. that 13.95 by the glass cost is pretty darn close to the bottle cost for on premise where i was. also, at a 6 oz pour you only get 4 glasses out of a bottle. (27.5 oz in a bottle if filled correctly) the rest will Go to spillage/overpour etc. but you can see the economics of by the glass. if it moves well.
assuming the retail shops in your area run on 30-35 margin add a dollar to the retail shops cost by the bottle.

I struggle when eating out to even get a glass sometimes. knowing the actual cost of the wine, either on premise or off premise. can really screw up your options..
ill never forget going to nicer place and they had Beringer white Zin on the menu by the glass for $11 a glass. cost at that time in all sectors was $2.82 a bottle. 3 glasses of wine paid for the case..

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Post #: 15

RE: what is fair/acceptable restaurant markup? - 10/18/2023 12:15:57 PM

BRR

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From: Seattle, WA
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I personally balk when it goes much over 2 x retail. If that's the case, I'll usually have a cocktail and be done with it. Generally speaking, Seattle has a lot of restaurants that charge just a bit over retail. I dined at a local place that had a 2019 Woodward Canyon Artist Series for $65 USD. I really enjoyed it.

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Post #: 16

RE: what is fair/acceptable restaurant markup? - 10/18/2023 12:18:52 PM

BRR

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From: Seattle, WA
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quote:

ORIGINAL: Echinosum

You complain about the mark-up on wine. What about the mark-up on a cup of tea? That's far more outrageous.

If we were sensible, we'd plan in advance the overall costs of the dining experience we'd like to have, and decide whether that was acceptable as a whole, and stick to our plan. Because the restaurateur is also looking at the totality of what we will pay. But we sit there and allow ourselves to be taken slice by slice, because restaurant selling methods are a case study in that, and we feel used afterwards.

Restaurants are a case study both in

- the psychological techniques of marketing, as set out in the classic book Influence: The Psychology of Persuasion by Robert Cialdini, suitable for the educated layman, and
- the techniques of self-selective price discrimination. There's a classic layman's text that covers that too, which I read fairly recently, but I can't recall what it is just now. Here's a short web article that sets out the basics. Perhaps you don't really need to read a whole book on that.

But I do strongly recommend reading Cialdini's book. It is a revelation to most people. About 10 years ago someone recommended it to me, and it took me a few years to get around to it, I wish I had taken greater notice at the time. Cialdini usefully sets out how we should defend ourselves against falling for the marketers using sneaky methods to get more money out of us.

Fascinating response, and I'm being genuine when I say that. Do you ever dine out? I would guess not, or rarely, based on this. I don't have a problem with paying insane markups on, say, tea or coffee. Why? Because that markup is still only a few bucks. I guess that for me, when dining out, it's less about the % markup and more about absolute dollars. A lovely bruschetta on toast had raw input of almost nothing I would imagine, but would likely cost $10-$15 and I'd still buy it.

_____________________________

Cheers!

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Post #: 17

RE: what is fair/acceptable restaurant markup? - 10/18/2023 12:42:18 PM

gruqqt@gmail.com

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What strikes me more than markup is the limited boring all the same wine lists at the majority of restaurants even high-end places. The distributors control selection apparently and my take is the owner does not give a damn. How difficult can it be to find some inexpensive (or not) surprises to offer your customers? Markup less transparent, customer can be made to feel catered to. I guess this assumes an owner / employee with tasting skills and the right patrons. I learned about wine from a small town wine store owner who tasted all the distributors' selections, identified buys by taste and price and taught his customers to recognize quality and value.

(in reply to fanglangzhe)

Post #: 18

RE: what is fair/acceptable restaurant markup? - 10/18/2023 1:04:12 PM

wadcorp

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We've been down this road before, but it is a subject that won't go away.

Restaurants with Reasonable Wine Mark-ups

Smallest mark up in restaurant/wine bar?

Biggest mark up in a restaurant

I really have to question things when they get over 2.5X retail pricing.

The biggest mark-ups always seem to be on the less-expensive bottles.

.

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RE: what is fair/acceptable restaurant markup? - 10/18/2023 1:11:24 PM

DoubleD1969

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I’m fairly sure there is generally a sliding scale for markup % based on the price/cost of the wine.

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Post #: 20

RE: what is fair/acceptable restaurant markup? - 10/18/2023 2:01:08 PM

Blue Shorts

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While most restaurants tend to follow the 200%-300% markup on wines, some do not. I know of one restaurant that has excellent food AND a good wine list....and they only mark up the wines by 50% - 80%. I would mention the name of the restaurant, but every time someone does that, I find it harder to get reservations

I'm sure that many here are familiar with Central Coast California restaurant to which I refer.

< Message edited by Blue Shorts -- 10/18/2023 2:10:50 PM >

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Post #: 21

RE: what is fair/acceptable restaurant markup? - 10/18/2023 2:12:25 PM

Wine Grove

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quote:

ORIGINAL: Blue Shorts

While most restaurants tend to follow the 200%-300% markup on wines, some do not. I know of one restaurant that has excellent food AND a good wine list....and they only mark up the wines by 50% - 80%. I would mention the name of the restaurant, but every time someone does that, I find it harder to get reservations

I'm sure that many here are familiar with Central Coast California restaurant to which I refer.

Are you referring to a restaurant more in the Paso area? Or more in the Santa barbara area?

(in reply to Blue Shorts)

Post #: 22

RE: what is fair/acceptable restaurant markup? - 10/18/2023 2:14:18 PM

Wine Grove

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quote:

ORIGINAL: BRR

I personally balk when it goes much over 2 x retail. If that's the case, I'll usually have a cocktail and be done with it. Generally speaking, Seattle has a lot of restaurants that charge just a bit over retail. I dined at a local place that had a 2019 Woodward Canyon Artist Series for $65 USD. I really enjoyed it.

I agree... I feel 50% above normal retail (or FMV for older vintage wines) is fair. Once you are doubling the bottle value, thats getting greedy.

(in reply to BRR)

Post #: 23

RE: what is fair/acceptable restaurant markup? - 10/18/2023 2:14:31 PM

Blue Shorts

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From: Santa Cruz
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quote:

Are you referring to a restaurant more in the Paso area? Or more in the Santa barbara area?

It's in the Monterey area. Ironically, your screen name provides a large clue

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Post #: 24

RE: what is fair/acceptable restaurant markup? - 10/18/2023 5:20:38 PM

WineGuyCO

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quote:

ORIGINAL: Blue Shorts

quote:

Are you referring to a restaurant more in the Paso area? Or more in the Santa barbara area?

It's in the Monterey area. Ironically, your screen name provides a large clue

I’ll take Fishwife or Passionfish for $500 Alex…

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Post #: 25

RE: what is fair/acceptable restaurant markup? - 10/18/2023 9:06:17 PM

Blue Shorts

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quote:

I’ll take Fishwife or Passionfish for $500 Alex…

Ding, ding, ding, ding, ding...We have a winner. I was referring to Passionfish.

(in reply to WineGuyCO)

Post #: 26

RE: what is fair/acceptable restaurant markup? - 10/19/2023 2:05:12 AM

Echinosum

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From: Buckinghamshire, UK
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quote:

ORIGINAL: BRR

quote:

ORIGINAL: Echinosum
If we were sensible, we'd plan in advance the overall costs of the dining experience we'd like to have, and decide whether that was acceptable as a whole, and stick to our plan. Because the restaurateur is also looking at the totality of what we will pay. But we sit there and allow ourselves to be taken slice by slice, because restaurant selling methods are a case study in that, and we feel used afterwards.

Fascinating response, and I'm being genuine when I say that. Do you ever dine out? I would guess not, or rarely, based on this.

I wrote, "if we were sensible". I didn't claim I did that, I just know that's the rational way of looking at it. We do look at it in that way when when planning a corporate function.

I eat out less than 1 per week on average, which might be "rarely" by the standards for example of my "rich friend" who seems to eat out almost every day. I generally buy beer in restaurants, except when someone else is paying, precisely because I have lots of nice wine at home and can drink it there. If I drank that kind of wine in a restaurant, it would probably cost more than the food bill for the whole party...

(in reply to BRR)

Post #: 27

RE: what is fair/acceptable restaurant markup? - 10/19/2023 6:06:07 AM

annerk

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I've found that the lower the price, the higher the markup.

I have also found that the better known the winery, the higher the markup. I look for lesser known producers from Italy, Spain, and France to find the lowest markup and best value on an American wine list.

That aside, I try to BYOB, even if I have to pay corkage, as it's almost always the best value.

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Post #: 28

RE: what is fair/acceptable restaurant markup? - 10/19/2023 7:05:18 AM

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Also remember that restaurants are not paying retail prices.
Also remember that very few restaurants serve wines with age (prob deserves its own thread).

That being said, wine programs keep many high-end restaurants afloat. I remember an interview in which Rene R said that Noma could not work without the wine program.
We rarely eat out because we like wine with dinner and can't stomach the combination of too much $ and too young.

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Post #: 29

RE: what is fair/acceptable restaurant markup? - 10/19/2023 9:27:08 AM

WineGuyCO

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quote:

ORIGINAL: S1

Also remember that restaurants are not paying retail prices.
Also remember that very few restaurants serve wines with age (prob deserves its own thread).

That being said, wine programs keep many high-end restaurants afloat. I remember an interview in which Rene R said that Noma could not work without the wine program.
We rarely eat out because we like wine with dinner and can't stomach the combination of too much $ and too young.

1000% Agree and my wife and I rarely eat out (at home) for the reasons mentioned. Cab Sauv is rarely an option when eating out because it’s too young or two expensive.

I usually try to cherry pick a Pinot, Etna Rosso or Priorat. Something that can be drunk younger. Chablis usually works to but as a meat lover I always lean toward red wine.

Being a pretty good chef/cook myself most restaurants can’t use the quality ingredients I use 100% of the time. I’m not sure where I could even find Duck L’Orange, Vitello Saltimbocca, Greek Style Lambchops, Japanese A5 Wagyu, Handmade Tagliatelle with Bolognese Sauce that cooks for six hours or other favorites I make on a regular basis. Colorado is not exactly a Culinary destination by any means.

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La felicità, come un vino pregiato, dev’essere assaporata sorso a sorso.

(in reply to S1)

Post #: 30