Tag Archives: restaurant wine prices

studio microphone

Winecast 28: Bret Thorn, Nation’s Restaurant News

Bret Thorn
Bret Thorn

Restaurant wine prices are so high because restaurant costs keep going up. But that doesn’t necessarily mean they need to be so expensive, says one of the country’s top restaurant experts.

Bret Thorn, the senior food and beverage editor at Nation’s Restaurant News, knows more about the restaurant business than almost anyone in the country. So who better to ask why restaurant wine prices keep going up despite woeful sales?

We talked about that, as well as changes in the restaurant business that may alter the way we eat out — if we eat out at all in the coming decades — and are changes that the restaurant business still doesn’t completely understand.

To high wine prices, says Thorn, some restaurant operators see wine as a way to recoup increased costs, which include a higher minimum wage in some states and rising food prices. Those of us who buy wine in a restaurant may be shouldering more than our fair share of those rising costs.

But Thorn is an optimist, and says there are a lot of smart people in the restaurant business who might recognize an opportunity to sell more wine — especially if we let them know we think a four to one markup for a glass of $10 wine is too much. His suggestion? Politely and reasonably let the restaurant know you’d buy more wine if prices were more reasonable. And no, he said, a Twitter rant probably isn’t the best way to complain.

Click here to download or stream the podcast, which is about 16 1/2 minutes long and takes up 11.6 megabytes. The sound quality is mostly good, though I wasn’t able to get it to play on my Linux box. Windows is OK, though.

restaurant wine list

Follow-up: Restaurant wine prices

restaurant wine pricesLast month’s restaurant wine prices post was so well received and got so many comments, both here and in emails, that it’s worth a follow-up.

Restaurant operators may well have their reasons for marking wine up four times their cost, as one comment explained. Or as this restaurant management website advises: “You can therefore reasonably price a bottle that retails around $20 at $60 and $80” (giving new meaning to the word reasonably).

But the numbers say otherwise. Restaurant wine sales measured by volume have declined for three consecutive years, failing to even meet the flat growth of overall wine sales. And they have not made up the difference with higher revenue, according to any number of national surveys for 2014, 2015, and 2016.

And we know the reason. Restaurant wine prices are too high:

• Emailed one regular visitor: “I don’t buy wine at restaurants because it’s too expensive.”

• Emailed a long-time Dallas restaurant operator, now retired: “I made money selling wine at 2.14 times the cost. The .14 was to cover the state fee. And I sold lots of wine by the glass and the bottle. And most important – staff training!”

• Said a distributor friend of mine: “If the only way for a restaurant to stay in business is to charge four times cost, then how did everyone stay in business when they didn’t do that? Or if they didn’t sell wine at all?”

• Perhaps the best comment in the original post? From a wine producer: “I only wish restaurants marked prices up 3 times. I am finding restaurants marking wine up 4 times. Trust me, the waiter makes more on his tips vs. the money I make producing the wine.”

In this, the restaurant business is alienating its best customers – the Baby Boomers who drink wine and who like to eat out. Because younger consumers are less interested in both, and their preference for delivery and eating restaurant food at home may eventually deserve the term disruptive — something, I think, GrubHub already knows.

Says this year’s annual Silicon Valley Bank wine business study, perhaps the best source of reliable wine industry data: “We believe the reasons for this change are explained by more at-home consumption and a behavior change of our frugal millennial consumers who are more likely to satisfy their restaurant consumption needs by starting with a beer or cocktail, then having a glass of wine rather than a bottle of wine with dinner.”

So, restaurants, keep charging $50 for a $15 bottle of wine. It’s not our problem; it’s yours.

Drop dead, restaurant wine prices

restaurant wine prices
Restaurant wine prices are too high, which prevents restaurants from selling more wine and restaurant customers from drinking more wine. Everyone understands this but restaurants (see the cheap wine book and various academic studies); nevertheless, the people who run them seem content to charge higher prices, sell less wine, and make even less money.

The Wine Curmudgeon was reminded of this again on Saturday night during dinner at Urbano’s, probably Dallas’ best-known BYOB restaurant and where the food is more or less moderately priced. During the 2 ½ hours we were there, everyone was drinking wine, most of the tables had more than one bottle (including sparkling and rose, not a common sight), and hardly any of the wine I saw was grocery store plonk. The table next to us, in fact, came prepared with a very expensive wine carryall that contained several pricey bottles.

What was the reason for all that wine? Urbano’s charges $5 per bottle for corkage, so no one had to pay $50 for a bottle from a mediocre wine list. Instead, a table of of four will spend $10 at Urbano’s for two bottles of wine, cutting the bill by at least one-third.

The caveats? Urbano is small, with fewer than a couple of dozen tables, and its reputation as BYOB means it attracts wine drinkers. But given the traditional Dallas antipathy to wine – the bottle at my table when I go out usually gets more than a few stares from the sweet tea drinkers – every table at Urbano’s that had wine speaks volumes about the difference price makes. Because, as our waitress told me, 80 percent of their customers bring their own wine.

So, once again, a plea for fair restaurant wine pricing. I don’t expect wine so cheap that it competes with retail pricing. But would it be so awful if restaurants only doubled the price of the bottle that cost them $10 instead of tripling it?

Winebits 332: Powdered alcohol update, wine vs. beer, and corkage fees

Winebits 332: Powdered alcohol update, wine vs. beer, and corkage fees ? Not so fast, Palcohol: Last week’s post extolling the virtues of powered alcohol was a bit ahead of its time. Turns out the federal government didn’t approve the product after all. A spokesman told The Associated Press that the approvals were issued in error, but didn’t elaborate; you can draw your own conclusions from that, though my liquor attorney, in last week’s post, hinted that the whole thing sounded kind of goofy. Regardless, this means we’ll have to wait for our powderita, as horrible as the wait may be.

? The end of beer as we know it? This graphic, courtesy of Lew Perdue at Wine Industry Insight, speaks volumes about the ageing of the U.S. beer-drinking population. Between 2002 and 2013, beer’s market share, as measured by drink volume, has dropped from 60 percent of the total to 51.1 percent. Spirits’ shared moved from 27 to 33.7 percent and wine’s from 13 to 15.2 percent. Why call it ageing? Because many analysts think beer’s decline is not from beer drinkers switching to spirits or wine, but because they’re dying and younger consumers are drinking something else. This has shown up in slumping sales for the biggest national brands like Coors, Budweiser, and Miller.

? I’m shocked that gambling is going on here: The wine cyber-ether was abuzz last week with the news that the very chi-chi French Laundry restaurant in Napa Valley charged a $150 corkage fee. The outrage was so viral that I’m surprised it didn’t show up on the blog even without my writing about it. Which I’m doing not because owner Thomas Keller cares what I write he probably collects criticism for his Pinterest site), but because no one should be surprised. This is the same restaurant that charges $70 for a half bottle of a Paso Robles white blend, which is almost four times the retail price for the half bottle. The other thing that’s not surprising? That his customers pay these prices. As one reader emailed me: “Are these people crazy?” Nope. Just rich.

Soda drinkers to restaurants: Drop dead (and why this matters to wine drinkers)

Too many restaurants have long alienated wine drinkers with lazy wine lists and greedy markups. Now, it looks like they have even alienated people who don’t drink wine.

NPD Group, one of the two or three best restaurant consultancies in the world, has found that consumers are forgoing costly soft drinks for free water. The reason? Diners are tired of paying overinflated prices for Coke, Pepsi, and the like — a trend that started before the recession, and only accelerated as they looked for ways to save money when eating out.

“Leaving off the beverage is the easy thing to do,” says Warren Solochek, NPD’s vice president of client services, and consumers are doing it with a passion. NPD reports that restaurant traffic has declined one percent over the past five years, but total beverage sales have dropped six percent.

Consumers, apparently, have three reasons for switching to water:

? The recession. Water is free, which can knock $10 off the bill for a family of four. “Consumers are working very hard to manage their spending,” says Solochek.

? Improved sensibilties. One glass of a soft drink in a restaurant costs as much as a six-pack at the grocery store, and consumers are noticing this more than ever. In this, says Solochek, there is evidence that our spending habits are genuinely changing, and that the post-recession consumer will be more practical in what he or she buys.

? Health perceptions. Soft drinks are mostly empty calories. Water isn’t.

What’s truly fascinating about this development is that it’s strictly about soft drinks. Restaurant wine sales have also declined, but Solochek says that’s because wine drinkers aren’t eating out as much. Instead, he says, we’re buying a bottle of wine and eating at home, where we don’t have to suffer those 3-for-1 markups. That soft drinkers are joining us in our disgust does not bode well for the restaurant business, which has traditionally used high prices for beverages, hard and soft, to boost profits. Those soft drink markups can be as high as 10-to-1.

And, to its credit, the restaurant business is aware of what’s going on. Solochek says owners and operators understand they need to be more innovative in how they approach beverage service, whether it’s for alcohol or soft drinks. This is one reason why many restaurants are pushing craft beer and signature cocktails; restaurant beer sales more or less held their own during the recession, thanks to the popularity of microbrews.

I’ve seen some of this change in Dallas, where a variety of restaurants are cutting wine prices and re-doing wine lists. Stephan Pyles, owned by the celebrity chef of the same name, has made over its list, focusing on more local, more interesting and less expensive wine. That this is happening at a restaurant where price resistance should not be a problem speaks volumes about what’s going in elsewhere in the restaurant business.

Does this mean the days of the 3-to-1 markup are over? Let’s not go that far quite yet. But it looks there will be changes, and we’re seeing some of them now. When groups as different as restaurant wine and soft drink consumers have something in common, we’re certainly not in Kansas anymore.