Sunday, March 7, 2010

Wine Pricing at Restaurants

As a follow-up on the corkage fee discussion, I thought it might be time to discuss wine pricing at restaurants. Anyone who is familiar with retail wine prices should have a pretty good feeling for the markup of the price of a bottle of wine when you get that bottle at a restaurant as opposed to a retailer. It can literally be a factor of 1.5 to 2, or even a skosh more. At first blush, this seems a little excessive, but a little logic explains why this is necessary. It takes time, money, and space (all critical to any business) to procure, properly store, and serve wines in a restaurant setting. Even though the price of a bottle may be two or more times what you might pay at your local wine shop, I doubt most restaurants are raking in the cash selling wines.

The bottom line is that wine can be a spendy accompaniment to a meal when dining out. You are going to pay more. Get used to it. It's a fact of life. The real question is how do you recognize a value and how do you decide some particular price is just too high? Granted, it's not easy, and you will most definitely pay your share of "tuition" to become somewhat comfortable in the area. But, it is not as daunting as it seems.

  • Get familiar with wine prices in your area. Next time you run down to your retailer of choice, take your time and explore the shop. Look carefully at what is available and make note of the prices. In South Dakota, our "three tier" alcohol distribution system esentially means that certain distributors have dibs on certain wines. Accordingly, one would expect that the veritable monopoly this creates means that prices of a certain wine from the distributor to the retailer remain identical across the board. Not necessarily. Some retailers get deals- maybe based on volume, maybe based on relationships- there is not always rhyme or reason to this. Needless to say, though, retail prices can vary. The only way to get a feel for those prices is to get out and check them out. Take notes if that would help.

  • Once you have a feel for the retail price of wines, you can start to benchmark them against prices at various restaurants. My advice is to find a couple particular wines to use for comparisons. For example, you might know that J. Lohr Paso Robles Cabernet Sauvignon goes for about $18 bucks a bottle at most retailers. If you see it for $40 on a wine list, you can get an idea of the markup. If you notice it for $35 somewhere else, file that away into your data base.

  • Study, study, study. This is a touchy subject for me. Although knowledge of wines is power, too little is dangerous and too much can either vapor lock you or turn you into the worst kind of wine snob. Personally, I think you need to be familiar with varietals, appelation, and vintage. Older wines are not necessarily better wines. It all depends. Some years are better than others for certain varietals, but that can vary by location (appelation). If you aren't reading or talking to people, you might not know why, say 2005 was better for Sonoma cabs than 2007. If you aren't personally wired into the industry, you are going to have to read to keep up on this stuff. It can pay off, though, because sometimes local restaurants and servers aren't paying attention to vintages. You order the Seghesio Old Vine Zinfandel, that's what comes out- but you might get a superior vintage, if you know what years you are dealing with. Don't be afraid to point out to your server that you were hoping to get the 2004 instead of the 2005. Nevertheless, too much knowledge can be a bad thing. Easily, one of the most annoying things I encounter in the wine world is the seeming ability of some people to memorize and rattle off the Wine Spectator or Robert Parker ratings for myriad wines. Look, if you can't consistently distinguish a wine rated 95 from a similar wine rated 85 in a blind tasting, just shut the hell up. Ratings have a place, and can be very helpful, but they are not and should not be the bellweather for selecting and distinguishing one wine from another. Only your own palate can do that for you.

  • Make friends with the "wine person." At most of the snazzier restaurants here in town, there is someone wandering around there that knows a whole lot about the wines on the list. He or she probably selected most of them for specific reasons. Don't be afraid to talk to this person and definitely don't be afraid to be very frank about what you want. Although restaurants are in the business of making sales, they also want you to leave happy and to come back. Tell the wine person what you are considering for entrees, what your likes and dislikes are, whether you are particularly interested in a certain appelation or varietal and what you are looking to spend. Please don't be afraid to ask about the values on the list. A good sommelier will point out wines that are drinking beyond their price.

  • Oddly enough, the more expensive the wine, chances are the less steep the markup. It's a little odd, but it's true. For instance, you might notice wines that you can buy for $10-12 on a list for around $25-30-- think Black Opal, Fisheye, Yellow Tail, etc. More expensive wines are not going get that kind of treatment. An example I have noticed right here in Sioux Falls are some of the Jessup Cellars wines. A bottle of Jessup Zin retails for about $40. You won't find that wine on any wine list in town for $80-90. You might even find it somewhere for about $50.
Get out there and check it out.


Anonymous said...

Great article. I must comment on the "deal pricing" from wholesalers. Retailers all buy at the same price. Sometimes wine is on deal and sometimes not, the retailer has this schedule and it is up to them to buy at the best price. It is against the law in SD for wholesalers to price based on volume purchased or relationships. There are also split case charges retailer must pay if they do not order an entire case of product. These split case fees are almost $1 per bottle. And then there is the margain at which a retailer chooses to sell product or that they may take a smaller margain in order to promote a sale. That being said, the article was very informative. Another aspect to restaurant pricing is that with wines served by the glass, pricing must take into account spoilage if an entire bottle isn't sold before the product deteriorates. Thanks for the tips!

The Secret Fork said...

Hey Anon, thanks for the great insights. I never mind a little correction and more info is always great.

The bottom line is that there are deals out there, but it takes some time and knowledge to ferret them out.

Happy hunting, everyone!

Anonymous said...

Just stumbled onto your blog -- can't wait to read more! It's good to read reviews from someone of like mind. I'm in Sioux Falls often and will be moving there soon so I'll be taking a lot of notes, I'm sure.

Richard Jones said...

Very interesting thoughts, and while I whole heartedly agree with the premise here, get used to paying more for wine at a restaurant than a store, how about another question that I have always had:

Why do two different restaurants charge widely different prices for the same bottle of wine? It should cost them the same, why the bump from one eatery to another?

The Secret Fork said...

Richard, take a look at the first comment, which seems to be from someone with more knowledge fromt he distributor/wholesaler point of view.

I think the answer to your question about why different restaurants sell the same bottle of wine, that was probably purchased for the same wholesale price, for a higher price is simple: They can and they might have to. I made note of this a few years ago. Before CJ Callaways dumbed themselves down to a more bar-food menu, a bottle of Jessup Cellars Zinfandel or Cabernet was less expensive than the same bottle at Foley's, which I believe was within the same ownership group even then.

I would imagine some restaurants have higher overhead and need to skooch the prices up a little on just about everything to try to make some moola. That's the "have to" part of the equation. In fairness, some of the "have to" might also depend on whether there is someone with good wine knowledge on staff, like a sommelier, or whether the restaurant is offering really great stemware and decanters.

I also believe some restaurants "can" charge more for a bottle of wine, because, face it some restaurants are simply more expensive than others and people expect to pay more from everything from the soup of the day to dessert. People who expect to throw down a couple of hundred bucks for dinner are probably not going to notice the fact they paid a few more bucks for a bottle of vino.