Tuesday, May 11, 2010

Restaurant Wine Mark-Ups: What's Fair, What's Not, and Some Strategic Advice

Among wine lovers, especially those of us who know what a bottle costs at the retail level, there are few things more frustrating than finding a wine we want to drink on a restaurant’s wine list, only to move our eyes over to the right-hand side of the page and see that it’s been marked up some obscene amount. And depending upon the restaurant, that amount can range from less than 100% (perfectly fine; in fact, on the very low side) to well more than 400%.

Wine Enthusiast Magazine reported on its web site the other day that, “In a recent survey of consumers’ wine-buying habits in restaurants, Julie Brosterman, CEO of WomenWine.com, found that 70% of respondents felt restaurant wine prices were too high. ‘People are savvier about wine markups than they used to be,’ Brosterman says. ‘They know retail prices, and they can look up wine prices on their Blackberrys while sitting in the restaurant.’”

This is an issue, especially as the economy starts to turn around a bit and people are beginning to spend a touch more on dining out. And it’s not only an economic issue, but a pride one, as well: It’s difficult to feel good about paying four times a bottle’s retail value--especially if it’s a mediocre one you can find yourself--just because you’re dining out.

Of course, there are other factors at play: The nature of the restaurant, the range and composition of the list, the kind of wine service that’s offered--all of these play a role in potentially adding to a wine’s mark-up. And, personally, I have no problem with high mark-ups at fine-dining restaurants that employ a team of sommeliers, a wine director, a glass-polisher, etc. As the article notes, that costs money, and part of the mark-up pays for that. My real issue is when more casual establishments play that game, and do so with mass-marketed wines. How are we supposed to react to a $9 bottle of shiraz that’s marked up to $50?

There are, however, some strategies that consumers can employ, including, as noted in the Wine Enthusiast article, the following:

Spend more for a better value. Most lists have higher markups on the cheapest wines and lower markups on high-end wines, so often the more you spend, the better wine you’re getting for the money.

Order mid-list. The second-least-expensive wine on the list is often marked up the most. Why? ‘People don’t want to look cheap, so they order the second cheapest wine,’ [an economics professor who has studied the issue] says. Go one or two bottles higher for a better deal.

Beware brand names. Popular brand names always get the full markup because they sell no matter what, [a well-respected wine consultant] says. ‘The restaurant is kind of punishing you for being a creature of habit.’

Be adventurous. ‘If there’s a wine I really want on the list but don’t think a lot of people will order, I put an even lower markup on it,’ says Jay Frein, wine manager at Margot CafĂ© in Nashville...’”

And, finally, go to the restaurant with an understanding of what’s more or less appropriate given the nature of the establishment.

And if the mark-ups are just too high to justify?

Ask what their corkage fee is, and bring your own.


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