Re: Restaurant Wine Pricing
    Ed Hale, April 7, 2001

    >>>Everyone has a free choice to work in the profession that pleases them the most, just as everyone has the freedom to choose the products and services they by.

    Just as everyone has the free choice to charge more (or less) for their wares and services.

    ****Just the very reason why I've quit going to many restaurants.  I don't like being ripped off.  300% in my book is not a fair markup.  To those of unlimited means, I say "enjoy!"

    >>>To bemoan the fact that in order to make mega-bucks I need to charge mega-prices for wine I think demonstrates the opposite side of the coin of which Brendan experienced in his restaurant experience; if you charge enough, people will stop coming.

    If I read Brendan's piece correctly, he merely said that wine sales increased 300%.  No surprise!  They weren't charging a lot.  But lets crunch some play numbers.  Say they sold 10 bottles a night (I don't know the size of the place or how many people drink), 6 nights/week for a year.  They were selling at $3 over retail.  (Of course they probably bought the wine at 66% of retail.)  Mark it up what anybody would consider to be a modest 50% and, assuming an average of $20 bottle, they'd make an extra $18,720.  It that was all real income, how far will that go split between the owners?  (And we didn't even mention taxes again.)

    ****It will go a lot further than not having it at all.  It's basically pure profit.  Quite possibly food sales will increased as well.

    But there's more.  If the time frame is correct, some friends tell me that the period Brendan was talking about was when that particular restaurant was trying to be a "wine and food" destination in Santa Maria, with a new, GOOD chef.  This would make it one of the few real foodie destinations in the town.  Again, if I'm correct, the restaurant was located at the airport and previously was the standard food you would come to expect of such a place.  Now, all of a sudden, there is a really good restaurant.  Any reason NOT to expect food sales to be up 60% and wine sales up 300%?  A local I spoke with tells me that in his opinion the $3 markup was not the main draw; it was the fact that there was this great new restaurant in town.

    But unless I'm missing it in my 'net searching, the place no longer exists..... Could it be that they couldn't produce the sort of quality they wanted on the income they made?  One can only speculate that that was the problem, or maybe ONE of the problems; but it is a real problem in some places.

    I should perhaps be more specific about the type of establishment I'm talking about.  Sounds like the type that Brendan's place was trying to be....

    ****Brendan's example is not the only one I've heard of but is entirely consistant with several owners I've spoken to in the L.A. area.  You can slice it and dice it anyway you want, but all things being equal, most folks won't turn their back on a good thing.  With food and service being equal, which establishment would you frequent, the one with the 50% markup or the one with the 300% markup?

    >>>Has the cost of any food item escalated at this rate?

    In the places I'm talking about, the answer would be, in a sense, yes!  Not that a steak costs all that much more, but the menu might NOW have steak and foie gras, or salmon and caviar where before things weren't so "fancy."  Or maybe the steak DOES cost more!  Maybe it allows the chef to buy the BEST quality meat instead of ordinary meat.  It depends on the priorities of the establishment.  So if the food money goes into the food, WHERE's THE PROFIT?  Wherever you can get it.  And if you can GET wine types to subsidize the great food, well, so be it.

    ****But no where near the rate of inflation of wine!  We're not talking about menu improvements (foie gras), just like item costs.  Has that $16 steak from 1990 become $48 today?  Not hardly.  If the food QUALITY improves, I have no problem paying for it.  Charge me more, don't hide it in the wine price.  The flip side of this is what about the great restaurants that DON"T have wine.  How do they hide their increased costs?

    >>>Why, therefore, must wine pricing bear the burden of supporting a restaurant?

    Because people are foolish (or wealthy) enough to pay it.  ***hear, hear!*** But again, I stress, that it also pays for BETTER food.  Unless you want to pay French Laundry prices for every really good restaurant meal, the money has to come from somewhere.  I've been to the French Laundry, but that was an "occassion" dinner, and I'm not likely to return.  I can't afford it (among other reasons).

    ****See previous paragraph!  If the food gets to be too expensive, I'll cook at home!

    >>>I'm still convinced that reasonable wine pricing can only increase total sales

    Very likely.

    >>>and add to the bottom line.

    Not if the extra money is poured INTO the food, making for a better dining experience.

    ****Let the food stand on it's own.  If it's that good, people will pay for it.  After all, I went to the French Laundry once too.  May or may not ever go back again, but I went for the food, not the wine.

    >>>I'm also convinced that greed will certainly lead to their demise.

    Depends on a lot more factors, I think.  The FOOD being number one.  I suspect the stock market will be much more a factor than greed.  Unfortunately a lot of good food may disappear along with the economy.

    ****Total agreement

    >>>What a shame that it's taken years to get Americans excited about wine, and now that sales are rising, the "we'll get 'em while we can" attitude is running rampant!

    I believe here you were speaking more about the winemakers than restaurants, which brings us back to what profit anybody is "entitled" to.  I have to leave that to you to decide.  We KNOW what David thinks.  How fortunate it is that we've found him.

    ****Primarily the winemakers (let's not even get into the other layers of wholesale/distributor markups), although many restaurants sure are jumping on the bandwagon.  Fair is whatever the market will bear.  But it still pisses me off that some people are so hell bent on the cashing in on the inceased popularity of wine that they'll end up pricing it out of the affordability of way too many people, people that they'll need to support their own industry. Now I think, I'll have a glass of wine and think about filling up those empty holes in my wine cellar!

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