Follow-up: Restaurant wine prices

restaurant wine pricesLast month’s restaurant wine prices post was so well received and got so many comments, both here and in emails, that it’s worth a follow-up.

Restaurant operators may well have their reasons for marking wine up four times their cost, as one comment explained. Or as this restaurant management website advises: “You can therefore reasonably price a bottle that retails around $20 at $60 and $80” (giving new meaning to the word reasonably).

But the numbers say otherwise. Restaurant wine sales measured by volume have declined for three consecutive years, failing to even meet the flat growth of overall wine sales. And they have not made up the difference with higher revenue, according to any number of national surveys for 2014, 2015, and 2016.

And we know the reason. Restaurant wine prices are too high:

• Emailed one regular visitor: “I don’t buy wine at restaurants because it’s too expensive.”

• Emailed a long-time Dallas restaurant operator, now retired: “I made money selling wine at 2.14 times the cost. The .14 was to cover the state fee. And I sold lots of wine by the glass and the bottle. And most important – staff training!”

• Said a distributor friend of mine: “If the only way for a restaurant to stay in business is to charge four times cost, then how did everyone stay in business when they didn’t do that? Or if they didn’t sell wine at all?”

• Perhaps the best comment in the original post? From a wine producer: “I only wish restaurants marked prices up 3 times. I am finding restaurants marking wine up 4 times. Trust me, the waiter makes more on his tips vs. the money I make producing the wine.”

In this, the restaurant business is alienating its best customers – the Baby Boomers who drink wine and who like to eat out. Because younger consumers are less interested in both, and their preference for delivery and eating restaurant food at home may eventually deserve the term disruptive — something, I think, GrubHub already knows.

Says this year’s annual Silicon Valley Bank wine business study, perhaps the best source of reliable wine industry data: “We believe the reasons for this change are explained by more at-home consumption and a behavior change of our frugal millennial consumers who are more likely to satisfy their restaurant consumption needs by starting with a beer or cocktail, then having a glass of wine rather than a bottle of wine with dinner.”

So, restaurants, keep charging $50 for a $15 bottle of wine. It’s not our problem; it’s yours.

5 thoughts on “Follow-up: Restaurant wine prices

  • By burnsey - Reply

    I cannot tell how many times I have preached the lower prices equals more sales thus more in the bank.
    Not sure if this is true in Dallas, but many restaurants in my town have 1/2 price wine nights on certain weekday nights. They do this to drive what would otherwise be a slow evening. It never fails to amaze me just how many bottles I see on the tables because of this.
    I would like to think that the owners would recognize this, and maybe not 1/2 price, but adjust accordingly all of the time.
    Nope.

    • By Wine Curmudgeon - Reply

      Burnsey, I guess we aren’t as smart as all the wise guys running these new restaurant chains.

      Yes, half-price wines nights do very well here. Bu they are few and far between. Because we’re not as smart as all those wise guys.

  • By J - Reply

    The restaurant where I work has an in house market where we sell wine, beer, plus deli offerings and homemade bread. Any bottle on our shelves, maybe a couple hundred choices, can be taken into the dining room for $5 over the retail. Our markup in the shop is on level with most wine shops. We sell a lot of wine and perhaps this is why.

  • By Bob R - Reply

    My wife and I rarely go out to restaurants anymore, and wine prices are a big part of the reason. I love good, interesting wine, and I have plenty in my cellar. And I also love to cook. So why spend $50-60 for a mediocre wine when I can have something outstanding for less than half that.

  • By Rob McMillan - Reply

    Separate from the research I do at Silicon Valley Bank, I can add that as a boomer and one who is immersed in wine, I bring my own wine and pay corkage almost always in California. Obviously the price of corkage varies between restaurants but consider this: Presume a $20 wine is $60 on the menu and the corkage is $20 … kind of a normal thing. In that case, I can bring my own wine and save $20, so I don’t buy at the restaurant. In this example if the restaurant lowers their markup to 100% ($40 on the list), I’m at breakeven and I don’t bring a wine from my cellar.

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