There Oughta Be a Law!

How many times have you started a sentence with, “There ought to be law” and finished it with “against price-gouging on restaurant wine lists? Okay, maybe you haven’t used those exact words, but you know what I’m talking about. Too many restaurants are gouging their patrons, and I’m sick and tired of it! Some patrons know the markups are crazy but pay them anyway. Others are clueless that they’re being robbed. They have a hard enough time just deciphering the appellations on a wine list, let alone knowing if the prices they’re paying are fair.

I have the illuminating opportunity of working in a wine shop and seeing the wholesale prices that shops and restaurants actually shell out for their wines. We mark up wines by about 50%, which is the retail norm and which covers our operating costs while allowing us to make a small profit. Sure we could mark things up much higher than that, but our price-savvy consumers would catch on and start shopping at the competition. Why would you pay $150 for Joseph Phelps Insignia when you could get it down the street for $100, right?

But price-shopping is not so easy in a restaurant. When you scroll down the wine list and see markups of 200-300%, what are you going to do? Run? Hide? Since you’ve already settled down in your seats, you’re most likely going to just suck it up and pay the ridiculous wine prices, or resort to drinking tap water. You can’t go the restaurant next door that might sell the wine for less and bring it back to your table. There is no bargain-hunting opportunity. You either pay what the restaurant charges, or you don’t get to eat there (unless they’re corkage friendly and they let you bring your own bottle).

The even bigger problem is that most people don’t realize the wine list items are marked up so high. Many will fork over $100 for a bottle that cost the restaurant $25. How can a restaurant justify profiting $75 for simply opening a bottle of wine and pouring it into your glass (which, by the way, takes them about five seconds if it’s a screw cap)? Do you think customers would be willing to pay so much if they knew the true bottle cost? What if restaurants were required to list two columns on a wine list: one showing their cost, and one showing the patron’s price? This would certainly show customers how badly they’re being fleeced, but we all know this would never happen.

Flashback to this past Saturday night in the city. Some friends and I headed out to one of our favorite eateries in Manhattan: Landmarc Restaurant. Landmarc is outstanding, not only because the cuisine and ambience is creative and comforting, but because the wine list is diverse and has extremely low markups. You can get a bottle of Cakebread Cabernet (the 2000 Benchland Select) for $98; no, this is not a misprint, and yes, this is hardly more than you’d pay for it in a retail shop. However, the only drawback with Landmarc is that they don’t take reservations, and this can be a problem on a busy Saturday night. After waiting nearly an hour in a ravenous state at the cramped bar, we decided to use our backup reservation at the restaurant next door. Much to our dismay, the “other” place was typical of New York City - good food, but exorbitantly high wine prices that ruined our mood and left us regretting the fact that we had arrived too late for a table at Landmarc.

I know that restaurants make their money on alcohol, and that’s fine because every business needs to make a buck somewhere. But it’s when they start making too many bucks that I get concerned. I know you can’t impose restrictions on what a business wants to charge for goods and services, but in all fairness, the average restaurant consumer knows little about wines and what they should cost. There ought to be a law requiring restaurants to stop this absurd pricing, or to at least disclose their markups and allow the consumer to make an informed decision.

A final note: I was compelled to call around to a few other Manhattan restaurants to check their prices on the 2000 Cakebread Benchland Select Cabernet. If you feel like getting ripped off you can go to The Palm and get it for $238. Ouch!

-- wg

Comments

[Jameson]

I have four (nice) letters for you: BYOB. Usually you can bring a killer bottle of wine (that you may have only paid 10-15 bucks for) and pay like 10 bucks for a corkage fee. Out of respect for my server, who may be pissed that I am not jacking up my bill with wine cost, I usually order one bottle off the menu.

And, of course, you don't want to bring a bottle that they have on their list.

Chicago is the best city for BYOB, from storefront Asian joints to places that deliberately only offer BYOB.

[WineGoddess]

Yeah, thank Bacchus for BYOB! But I've been to several places lately that don't allow it. And don't even get me started on corkage fees, please...that's a whole second article right there. I'm thinking specifically of a local CT restaurant that charges a $30 corkage fee, and the place doesn't even have a decent wine list!

[Jens]

I wish someone in the restaurant industry would defend the pricing of the wines when it seems reasonable to me, as I learned in Econ 101, that there is a price elasticity curve on pricing of an item. Charge too much and unit sales go down; charge too little and you don't make enough money. I am willing to bet that if the wine pricing were reasonable and close to retail prices, people would buy more expensive wines and maybe order an extra bottle! Tell me I am wrong!

jens at cincinnati wine "place that fixes cars"

[Jack]

First, I too hate high markups of wine in restaurants. It sets a sour mood for the night and I just try not to go to those places anymore. Charging 3 times or more retail price for a recent release of some wine gets me quite pissy.

Second, the middle-high to high end restaurants make little or no money on the food. Instead they make most of their money from selling beverages. Yeah, that's just how it is. Restaurant patrons always want (in general) large portions of food for as cheaply as possible. But costly ingredients have to be paid for somehow. Beverages.