Why does wine cost more at restaurants?
Sometimes I’m in disbelief when I go to a restaurant and one glass of wine I’m ordering costs just as much as the whole bottle does at the wine store down the street.
So, why does this happen?
A multitude of different factors go into the markup on wines. To find out all the reasons, I spoke to industry expert and author of “The Unfiltered Guide To Working In Wine”, Hillary Zio, about what exactly causes these markups.
C: Let’s get right to it, why is wine marked up in restaurants so much?
H: There are several reasons why wine needs to be marked up four or so times the wholesale price (in restaurants) but some places are just ridiculous. Let’s look at these five, main reasons:
Experience – Steakhouses I have found are by far the worst in terms of wine markups. Maybe it’s all of those white tablecloths and expensive knives. Maybe there’s some beautiful view at the restaurant that needs to be maintained (constant window washing, a clean pool, freshly cut grass, etc). These factors are actually considered when discussing wine prices. Everything is relevant when trying to keep your restaurant afloat.
Taxes – Yes, taxation and state laws play a huge part in marking up wine at a restaurant. Some states have liquor tax AND wine tax, so it’s literally doubled! Pennsylvania has to deal with a similar situation, which I think is very unfortunate and needs to be revisited.
Staff – They have to take care of you, greet you, pour for you, and manage the people that oversee all of this as well. I could go on and on here: training, paper products, healthcare, it’s just like any other business.
Wine Costs – I don’t think many people realize how much wine goes down the drain. Let’s say you have 8 different wines by the glass (4 white and 4 red). If it’s Monday and you open 5 of them, they have until Wednesday morning before they need to go down the drain (on average). Most people that work in wine know that wine turns into half of “itself” the next day. Not to say that it’s completely bad, corked or turned into vinegar, it’s just so much less flavorful than it was the day it was opened.
Also, some restaurants don’t “pump” (remove the air) and place the wine into the fridge. That’s right, all wine (white or red) should spend the night in the fridge if it has been opened and poured from. This keeps it as fresh as possible for the following day. Some wines are great two days later, but most just don’t taste like anything, leaving your guests saying “meh” and probably not coming back. Also, think about all of the bottles that get turned down by guests for being corked, disliked, or any other reason.
Trends – Sure, if a Beverage Director notices that everyone’s drinking the $12/glass of Oregon Pinot Noir, he or she might increase the price by a few bucks. On the subject of trends, however we are moving in the right direction and markups are becoming noticed.
Restaurants with a good wine list (and in-turn a community who knows about wine) realize that they can’t go too crazy without a Sommelier calling them out. This is especially the case for recognizable wine. I know a lot of sneaky wine bars that only carry unrecognizable things so that they never get busted for massive mark-ups. However, you’ll notice a few eye rolls from the industry guests when a $17 glass tastes like it should be $7. You ALWAYS want wine industry folk dining in your restaurant. They create buzz, drink a lot, and have a lot of friends that do the same.
C: Do you think it’s worth paying more at a restaurant to get the full experience?
H: I used to, but now I just go where the good wine is fairly priced. In my early twenties, I was all about that super fancy experience and dressing up. Now, in my thirties, I’m kind of over it. Of course I like good service, but you don’t want to leave a restaurant thinking that you got ripped off. I like to read Eater, talk to my peers, browse menus and wine lists online and just go to the places that interest me.
C: Do you think restaurants without a somm should be marking up prices as much?
H: I don’t really think it matters. If it’s a Somm that’s marking it up, a manager, bartender, whatever… I just think that everyone should be fair about it. If your restaurant has a lot of costs (like insane NYC rent for example) and you literally have to mark up the wine to stay in business, then that’s just what you have to do. There are plenty of knowledgeable restaurant owners, managers, servers, and they should not only be fair, but they should keep their wine prices in line with that of their competition.
Also, some restaurants don’t need a Somm. Let’s say the owner buys four times per year, and the wine deliveries come in at the same time every week, or some other kind of organized system, a full time Somm might not be necessary. I also know several servers that are more wine knowledgeable than Somms, who would price wine more appropriately as well.
C: Is there anything else we should know about wine mark ups?
H: I think that it’s important to remember that some establishments can charge literally whatever they want, so if you’re not looking to pay triple, stay out of them. For example ski resorts. You’re skiing in the middle of a mountain and want a glass of wine? Well you have 2 options: The bar at the top or the bar at the bottom. Without competition, these bars can mark-up however they want and people will get a drink if they really want one.
You can pick up your own copy of Hillary’s Book here.