I almost never order alcohol in restaurants because I have to drive home afterward (and cabs are expensive). That is a good thing, because I recently learned that how high markups can be: a bottle is marked up 300% in restaurants over the wholesale price, or 200% over the retail price (see WSJ article on pricing formula).
Cheaper vintages tend to be marked up at a higher percentage (300% – 400% of wholesale) compared to more expensive ones (150%-200% of wholesale).
That means a $20 bottle you bought at a grocery store would cost you $50 at that bistro down the street. WOW! I was always under the impression that wine markups were high, but I had no idea how high.
Also, as can be imagined, more expensive restaurants may have higher markups.
In most cases, the fancier the restaurant, the higher the markup. A top-tier chef, a team of sommeliers, a large wine cellar and expensive stemware are all built into the wine price. Because pricier restaurants typically have fewer tables and less turnover, they need to make profits on fewer bottles sold.
Buying wine by the glass is even more costly. Restaurants tend to charge the wholesale bottle price for a glass – so that they make back their investment with the first glass (see this ChowHound thread about wine markups) and protect against loss if any bottles have wasted wine.
WSJ recommends that diners avoid ordering by the glass if possible – for reasons of taste as well as value.
If the wine in an opened bottle doesn’t sell in a few days, for example, best practice is to pour out the spoiled wine — but whether that happens or not is a matter of conjecture. For diners looking to maximize the value per ounce, ordering a pricier bottle may be a better choice than ordering by the glass.
A few nights ago I went out to a cheap burger & fries place where the entrees top out at $10 or $11. A friend ordered a couple glasses of red. The restaurant didn’t even say what type of red it is. She forgot to check the price, but assumed that it was $5 or $6. Turns out it was $9!! Two glasses added up to almost $20. Talk about high markups!
I’m trying to become more educated on wine… and I think I shall begin with my education at home, where I can drink excellent Pinot Noirs & Chardonnays purchased at Costco for $10 or $15. These bottles, according to formulas on markups, may cost $30 or $40 at a restaurant.
What type of wines do you order at restaurants? Do you ever buy wine by the glass?
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