Markups in licensed restaurants

Waiters Friend · Post by **Waiters Friend** » Tue Sep 02, 2008 11:56 pm

G'day

This has been inspired by the thread on 'disgraceful wine lists', and addresses the other side of the issue: what is a reasonable markup on wine in a licensed restaurant?

I realise that it is not pure profit on top of the wholesale bottle price - you're paying for staff, glassware, cleaning, and the risk that the restauranteur is taking in stocking the wine in the first place. Add a percentage of corporate overheads as well (electricity, rent, storage costs).

I've heard the story of the restauranteur that actually calculated these costs (admittedly some years ago) and decided that it cost him $6 per bottle to meet his overheads, so he charged a standard markup of 100% of wholesale + $6, regardless of whether it was a Grange or a Jacobs Creek. This made it much better value to experience further up the wine list (pricewise), and I have seen quite a few winelists where a similar principle results in relatively better VFM higher up the list.

Compare this to a standard 200% or 300% markup (or worse) on every wine. The cheap wines are still as relatively cheap, but the consumer must see the obvious rip-off when the wines on the list are those they can pick up on the way home at the bottle-o for 1/3 of the price.

Restaurants (and I realise many cannot do this, in the family or cafe dining market) can offset this by offering wines that aren't available at the local - and this relates to the similar discussion (a la 4 Corners this week) regarding the role of the specialist wine shop vs Liquorland.

However, I have only my own perspective on this issue, and would love to hear more. So, I'd be delighted to hear from you, especially if you're in the hospitality industry, and have some inside info. I've only played on the perimeter, so am no expert.

Cheers

Red Bigot · Post by **Red Bigot** » Wed Sep 03, 2008 9:35 am

That's why some of the big companies have "restaurant-only" wines, so you can't compare. And some smart restaurants also source wines from obscure makers (apart from the fact they may be good wines.)

For current vintage wines, 100% on purchase price (not RRP) seems reasonable, maybe plus the overhead amount in your post. Not many restaurants actually seem to cellar (many) wines themselves these days, so investment and cellaring costs are low for most of them. I have seen some restaurants apply a sliding scale, with markup on higher-priced wines less than the % markup on cheaper wines. This seems sensible to me, but I guess if you are a restaurant in a very prosperous area, you don't have to reduce your profit margin by doing that.

I personally can't see any justification for charging 200% or more on RRP and avoid restaurants who use that pricing. I know I probably miss out on some excellent food, but to me it's not worth effectively doubling the price of the food (or more) to have a decent wine with it. While I can get food that is probably just as good and pay $10-$20 pb corkage and have some excellent wines from my cellar they won't get my patronage.

Ultimately the market judges. If the food is good enough and the location good enough then pricing is what the clientele will pay. Obviously quite a few get it wrong or can't keep up the quality of the food, based on the closure rate for restaurants.

hmmm · Post by **hmmm** » Wed Sep 03, 2008 5:59 pm

ottomans - canberra, probably the least marked up wine list i know of...

mind you there are some decent mark ups, but check it.

canberra:
http://www.ottomancuisine.com.au/Canber ... t-Canb.pdf

sydney:
http://www.ottomancuisine.com.au/Sydney ... -Syd08.pdf

hmmm · Post by **hmmm** » Wed Sep 03, 2008 5:59 pm

as above

Teddy · Post by **Teddy** » Wed Sep 03, 2008 6:26 pm

I agree, Looks like a great list with some realistic prices.
Trev

dazza1968 · Post by **dazza1968** » Wed Sep 03, 2008 8:42 pm

Red Bigot wrote:That's why some of the big companies have "restaurant-only" wines, so you can't compare. And some smart restaurants also source wines from obscure makers (apart from the fact they may be good wines.)

For current vintage wines, 100% on purchase price (not RRP) seems reasonable, maybe plus the overhead amount in your post. Not many restaurants actually seem to cellar (many) wines themselves these days, so investment and cellaring costs are low for most of them. I have seen some restaurants apply a sliding scale, with markup on higher-priced wines less than the % markup on cheaper wines. This seems sensible to me, but I guess if you are a restaurant in a very prosperous area, you don't have to reduce your profit margin by doing that.

I personally can't see any justification for charging 200% or more on RRP and avoid restaurants who use that pricing. I know I probably miss out on some excellent food, but to me it's not worth effectively doubling the price of the food (or more) to have a decent wine with it. While I can get food that is probably just as good and pay $10-$20 pb corkage and have some excellent wines from my cellar they won't get my patronage.

Ultimately the market judges. If the food is good enough and the location good enough then pricing is what the clientele will pay. Obviously quite a few get it wrong or can't keep up the quality of the food, based on the closure rate for restaurants.

I agree completly, I had my daughters birthday recently and i have some great 96's in the cellar and we went out to a restaurant that would not entertain the idea of me opening her birth year and it pissed me right off :evil:

I had a genuine reason and it was important to us .....................

Regards Dazza

tpang · Post by **tpang** » Thu Sep 04, 2008 10:48 am

Just sharing an experience.

I was at the Rockpool Grill a couple of weeks back and browsing through the winelist, I found the 2005 Sine Qua Non shiraz for $185. Retail was $250 then. No thinking required to get a bottle (should have done two in hindsight). Asked if I could buy a bottle, but was told they don't have a retail license.

Rang up last week to make a dinner reservation and asked for a bottle of SQN to be put aside for me, the sommelier said 'sure, but I should inform you that the pricing is different from the last time you had it' They had amended it to $480. That's a 92% markup from RRP which isn't too bad really.

Still kicking myself for restraining myself that first night.

Old Salt · Post by **Old Salt** » Thu Sep 04, 2008 12:59 pm

Best deal I came across in recent times was at a pub bistro (Normanby Hotel, Brisbane) two weeks ago, 2004 St Henri @ $69.90!! At that price, future son in law's father and I managed to dispose of two between us. Glad I put six into storage, the only Pennies I bought (so far?) this year. And the steaks were fantastic as well.

bacchaebabe · Post by **bacchaebabe** » Thu Sep 04, 2008 1:10 pm

hmmm wrote:ottomans - canberra, probably the least marked up wine list i know of...

mind you there are some decent mark ups, but check it.

canberra:
http://www.ottomancuisine.com.au/Canber ... t-Canb.pdf

sydney:
http://www.ottomancuisine.com.au/Sydney ... -Syd08.pdf

Gee, they are probably the two best and most reasonnable wine lists I've seen. $100 for the 05 LEAS at Sydney. Feel like going there right now!

Wayno · Post by **Wayno** » Thu Sep 04, 2008 1:46 pm

tpang wrote:Just sharing an experience.

I was at the Rockpool Grill a couple of weeks back and browsing through the winelist, I found the 2005 Sine Qua Non shiraz for $185. Retail was $250 then. No thinking required to get a bottle (should have done two in hindsight). Asked if I could buy a bottle, but was told they don't have a retail license.

Rang up last week to make a dinner reservation and asked for a bottle of SQN to be put aside for me, the sommelier said 'sure, but I should inform you that the pricing is different from the last time you had it' They had amended it to $480. That's a 92% markup from RRP which isn't too bad really.

Still kicking myself for restraining myself that first night.

So I take it it was worth the bargain price of $185 the first time around.

tpang · Post by **tpang** » Thu Sep 04, 2008 3:23 pm

So I take it it was worth the bargain price of $185 the first time around.

Oh yea! SQN rocks my world. Rich, complex Central Coast sublimity in a bottle

Waiters Friend · Post by **Waiters Friend** » Thu Sep 04, 2008 10:48 pm

It's interesting now hearing about wine list bargains, rather than over-priced wines. An interesting one I came across was Leeuwin Art Series Chardonnay at $65 a bottle - in a small Italian restaurant in Kalgoorlie of all places! On looking around, I could see quite a few timber 6-pack cases of reputable wines, and it seems they rotate what's going to be on special amongst the big guns. Their regular wine list prices were reasonable, but this was something special.

Daniel Jess · Post by **Daniel Jess** » Fri Sep 05, 2008 2:18 am

tpang wrote:Asked if I could buy a bottle, but was told they don't have a retail license.

In QLD, as a sommelier, we can offer one bottle retail to take home per guest, provided that guest dined at the restaurant that day.

Daniel Jess · Post by **Daniel Jess** » Fri Sep 05, 2008 2:23 am

Old Salt wrote:Best deal I came across in recent times was at a pub bistro (Normanby Hotel, Brisbane) two weeks ago, 2004 St Henri @ $69.90!

Ok that's just cheeky! How the heck did they get it cheap enough to put it on for that price? Even wholesale LUC prices would mean they'd hardly be making any profit at that price. Maybe they had a special deal going or had excess stock. Very jealous here.

Red Bigot · Post by **Red Bigot** » Fri Sep 05, 2008 7:55 pm

Another interesting wine list with (mostly) reasonable markups (at least many less than 100% on RRP) from one of the best Canberra restaurants.
http://www.gingercatering.com.au/area.asp?aID=25