Wine Pricing In Restaurants: What's Fair?

What's a fair price for a glass/bottle of wine in a restaurant?

This question showed up as a comment to one of my posts.  I'll give you my opinion, with the caveat that I'm not a restauranteur trying to make a living.

By the bottle:

Most restaurants will let you bring in your own bottle of wine (as long as it's not one on their list) and charge you a fixed (i.e. independent of the cost of the bottle itself) corkage fee.  If that's so, a rational pricing mechanism would say that bottles on their list should be priced at suggested retail + corkage.  In that case, they are making the retail markup on the wine, plus a once-per-seating corkage fee.  Note that suggested retail is not what you pay at Safeway when buying with your Club card - it's what you would expect to pay at the winery (IMHO).

Of course, wine and spirits are a profit center (and thus defray costs of people who don't drink with their meals), so I think you're unlikely to see a completely rational price for restaurant wine.  Plus, a good list is worth something in itself -- I expect to pay something for access to wines and vintages not in my local wine shop.

For myself, I think a 2x markup from wholesale is a very fair price to see in a restaurant for a wine which you can actually buy today.  More than 3x gets my dander up.  Note that wholesale price is typically 67% of retail (or retail is a 50% markup from wholesale), a "fair" price for the $25 bottle of wine I bought at the winery is $35 (2.1 times the $16.67 wholesale price). 3x wholesale is $50.

Note: for rare wines, well-kept, I think a restaurant should charge what the market will bear.  People buying these at a restaurant aren't worried about "fair."

By the glass:

For purposes of analysis, consider that a 750ml bottle contains almost exactly 5 five-ounce servings of wine.

If the wine being served by the glass is also available on the wine list (I can't imagine it wouldn't be), then I would expect to see a price which is 1/5th the price of the bottle (in a perfect world, where wines never spoil) .  And indeed, if it's a place that serves a lot of wine by the glass (so there isn't much spoilage), that seems "fair."

I'm willing to pay more if the by-the-glass wines are treated well once they've been opened, raising the likelihood that what I'm drinking will be tasty.  I can also see charging a bit more for wines which are less likely to be consumed, where the wine is offered by the glass for people who like to try something new (e.g. Petite Sirah by the glass).

Bottom line:  It would be great if restaurants were more transparent about how they price wine.  As someone who almost always buys wine when dining out, this information would make me feel better about the restaurant (just as I like knowing that Costco limits its markup to 15 percent or less).  Most restaurants probably don't want the hassle of dealing with people who don't like their explanation, though.  

So, now it's your turn to opine on what's "fair."  Please leave a comment.

Comments

[el jefe]

By the glass pricing is usually more based on a combination of what the market will bear (e.g. there is an upper limit on what anyone will pay for a glass of Sauv Blanc in a particular market) - and the wholesale price. Typically, a restaurant want the wine to be paid for by 1 or 2 glasses and then it's profit after that. Even at a busy restaurant it is typical that some part of a by-the-glass bottle goes to waste.

[Jim C]

I once ran a restaurant where the owner listed our cost per bottle and then the selling price, which was about $10 over cost. We didn't sell much wine at all. When we reprinted the menu with new pricing that was in the standard 2x-3x markup, our wine sales increased. Go figure...

[Jason]

I work in the restaurant industry and our cost in many states isn't as cheap as you would think it is. Restaurants usually have to pay extra taxes that raise the wholesale price quite close to retail levels if not to it. This tax is for the alcohol being consumed on premises. Wine retailers usually don't have that tax added to their inventory cost, we do unfortunately.

Expansive wine list also cost a ton of money in cellar cost (climate controls and lost space that could be used for tables), specific glassware, and in some restaurants, special dishwashers for crystal. The smaller the wine list, the less I'm willing to pay in markup as a 30 bottle list should be turning over. A 300 bottle list, not so much. Usually two times retail is what I'll pay, maybe a bit more if it's a real gem and it's only there because I have several hundred bottles to pick from.

[Thomas]

Restaurants should realise that if they want customers to carry on dining out then they need to lower their prices. It's not rocket science.
http://www.rb2132.info/

[Shannon brown]

And you should realize that restaurants cost of operations mean our profits really aren't very high...

[lisa]

I like the idea of being able to go out and drink wines by the glass and not have to pay an arm and a leg. Unfortunately, being in the restaurant business, I realize that the arm and a leg we have to pay vs going to the store and picking a bottle up on the way home is keeping that restaurant open. Not only do restaurants have a high price to pay in taxes, but don't forget the liquor license, the stemware (who wants to drink out or a nasty glass?), storing the wine and the stemware... For some restaurants, like mine, I like to change the list up based on new and interesting wines that our distributors present to us. Also, I like to have more whites in the summer and more reds in the winters. This constant changing of the list means more time and money in printing the menu, educating the employees on the always changing list. Also, by being able to charge a bit more than just wine plus corkfee or wine times 2, you are ensuring that when the bottle goes bad because people don't order it as often, you pour it out. If I can't charge more, I'm going to make sure I sell every last drop of that bottle regardless of how it tastes. I was driving by a restaurant today and I saw a sign that said 'Special! 40 cent oysters!' I thought to myself, wow, to some people that may seem like a bargain; to me, that screams food poisoning!! You pay for what you get. And unfortunately, restaurants are not cheap to keep open. Bottom line, if you think it is too expensive to drink wine in a restaurant - bring your own and pay the cork fee or drink at home.

[Mike Duffy]

Lisa -- I don't disagree that a restaurant has costs beyond the price they pay for a bottle. My point was that restaurants should be more transparent about their pricing, in a way that's understandable to the customer.