Last 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.