V. DRINKING WINE: Restaurant Pricing

Restaurant Pricing:

For many years and in many places, the cost of wine has been a standard mark-up of the retail cost, say two to three times retail. But in many cases a restaurant probably isn't paying retail--in fact, the price to them is often less to much less than what it would cost you at the winery. The huge mark-ups paid by the customer are an incredible amount to pay for wine and often means that there is more profit in the wine than in all the other food combined. Certainly if the restaurant can get customers to pay such inflated prices (and perhaps by doing so subsidize their otherwise perhaps fine cuisine), then so be it.

But personally I think that it is time to not give in. There are several ways to go about this:

  • Learn the better buys. For example, where I live, (Red) Zinfandel is not nearly in as much demand as Cabernet Sauvignon. The bargains are better (and I like it anyhow). Lesser known wines may be just as good or better than the more expensive "name" brands.

  • Some restaurants (as limited by local law) who are not allowed to sell wine may allow you to bring your own. It would be a good idea to ask for details before showing up, however.

  • Some restaurants (as limited by local law) will allow you to bring your own (even if they have a wine list) and charge you a "corkage" charge for the privilege. If you have some special wines at home, the corkage charge is rarely going to come close to the cost of the same wine, were it on the wine list. Note that it is bad form to bring a wine that is on the wine list. At least one Internet poster claimed that there was not a "single true gourmet restaurant in New York, Boston, or Washington" which allows customers to bring their own wine. While I'm willing to doubt the statement, I know for a fact that this just plain not true in Southern California. In any event, it would be a good idea to ask for details before showing up, however.

  • Boycott the restaurant (or boycott buying wine in the restaurant). When doing this is probably will have a much better effect if you let the restaurant know what you are doing.

Some restauranteurs are truly devoted to a fine evening at prices that are not horrendous mark-ups. The meal may not be inexpensive for fine ingredients are expensive, but the mark-up over cost is certainly not fixed. There is something to be said for the cost of cellaring the wine (and keeping good glassware--which breaks--to serve it in). Also, local laws may mean that the restaurant isn't necessarily paying anything less than retail. However, there are enough fine restaurants in this world that one should seek out and promote the ones who are willing to present a fine meal without gouging. In so doing, they will do even more business and will "make up," at least to some degree, profits "lost" from not over-charging on the wine.

Some will ask: "how much is gouging?" I don't have an answer for that. But I can tell you that one local restauranteur (in one of the best restaurants in California) would rarely add more than a fixed amount (say $8 for the more expensive wines) over what he paid. Not a fixed percentage, merely an amount that was about the same as his corkage fee (and less for the less expensive wines). It seemed fair to me.

And speaking of gouging, what is a fair corkage? Well, just what is the corkage for, anyhow? I said above that perhaps corkage covers the cost of serving since the glass gets dirty or can break. But then, everything else gets dirty including the spoons I don't use because I don't order dessert or coffee. Well, alright, glassware might be more expensive. Persuasive? Then there is the cost of storing wine. If people kept bringing their own wine, storage costs would go up, since you would have less room. But then you wouldn't need to buy more wine if you had a good idea of how much you needed, and the wine you stored would go up in value as it aged (except for wines that eventually go bad). Knowing how much to buy and how much of what is the key. Pesuasive? Corkage can be the way the restaurant makes the profit it isn't getting when you don't but their marked-up wine. But you don't have to drink any wine. Persuasive? Finally, perhaps corkage is the way the restaurant discourages you from bring you own wine. I've noted the price of corkage going up of late. At least one restaurant raised its corkage because it was trying to bring them in-line with the more expensive, fancier places. Does this tell you anything about what corkage is about? There is nothing that says you can't negotiate with a restaurant. If you are a good customer and you make it clear that you will either take your business elsewhere (or perhaps worse for them), come and not buy wine, then their idea of what they want to charge may change. It is all business and you as the customer may, in at least some situations, have more control than you think.

There are those that like to bring up the mark-up on carbonated beverages (where it is oft stated that the cost of the container is higher than the cost of the liquid itself--and in any event can be measured in pennies). It is said that if you don't complain about that outrageous mark-up you have no right to complain about wine mark-ups. Personally, I won't order carbonated drinks for that reason. In any event, I don't buy the argument, however. $1 is a lot more affordable than $50.

While restaurants are in business (and it can be a very risky business) to make money, some restaurants are willing to charge less. There are those who make cogent arguments that high prices for wine are merely the way that a restaurant can stay in business--and they are entitled to make as much as then can. But I am friendly with enough restauranteurs (and good ones, for that matter) who feel that a more reasonably priced wine list is part of the way that they want to do business. For that reason, I spend more in such places overall. I'll usually leave the over-priced places to those who are willing to pay.

Supply and demand is controlled by the buyer. A restaurant which puts emphasis on a good and fairly-priced wine list may find that it will attract a great deal more customers. We, the wine-buying public, should seek out such establishments and prove it.

One interesting sidelight to this discussion: It has nothing to do with those restaurants who cater to people who have all the money in the world--and act like it. I doubt I would be comfortable in such a place. Well, I know I'm not, having tried a few--and I don't think wanted me there, either.