Wednesday, January 11, 2012

Restaurant wine prices

How many time have you been out to dinner and ordered a bottle of wine off the wine list and were blown away by the markup of the price of the bottle. We recently went to a local restaurant and when looking at the bottle price of some of my favorite wines (that I have at home in my cellar). A New Zealand Sauvignon Blanc, available at Costco for about $9 a bottle, was selling for $27 a bottle. Should you be shocked? Well, lets look at the math and also compare with other available drinks at your local restaurant.

That wine was marked up 3-times the wholesale price. How about a bottle of beer? Well, a domestic beer was selling at the same place for $5.75 a bottle. You can buy a 6-pack of the same beer at your local grocery store for the same price as a single bottle! That is a mark up of…… 6 times. (No high level math here).

How about soft drinks, $3.50 a glass for a Pepsi or Coke, refills usually cost the same too. How much do you think THAT markup is? Then we go to Ice Tea…. Do you even want to think about the mark up on that item?

So while paying $27 for a bottle of $9 wine in a restaurant might seem out of line, when compared to other drinks, it isn’t such a bad deal. Also, most restaurants let you bring in a bottle of wine and charge you a corkage fee. Normally it is around $12 a bottle. Add that to the cost of the wine you brought from home, and it is still a deal. (I don’t think I have ever seen anybody bring into a restaurant a bottle of sun tea to drink.)

Restaurants are not high margin businesses and there are many costs associated with running a restaurant that go into the cost of that bottle of wine. From things as basic as stemware (and associated breakage) to training, cost of carrying inventory, etc that makes that bottle cost more in a restaurant than in a retail store.

So next time you go out to dinner, check out the wine list, try a wine that you do not have at home, enjoy the meal, enjoy the wine, enjoy who you are with and have fun.



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