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March 24, 2010

The Grape Escape: Wine list pricing — fair profit or masked bandit?

You’ve checked the menu, and now it’s time to consider the wine list. Let’s see ... how about a Louis Jadot Beaujolais-Villages? It’s popular, good with food, and at $24, it’s a low-end item on a list that goes up to $100 or more for the fancier stuff. Sounds like a deal.

Just one minute there. Last week, you got this exact same French red at the wine shop. It cost $12, and sometimes it’s on sale for $9.

Should the wine waiter don a black mask and brandish a pistol when she asks for a markup like this?

Maybe not.

Here’s a fundamental reality of the restaurant business: To make the budget work in an industry with tight margins, restaurateurs look to substantial markups on wine, beer and liquor to help stay in the black. (They also rely on paying servers sub-minimum wage and count on you to make up the difference through tips, but that’s another story for another day.)

Restaurateurs argue they earn their markup on food by preparing it, plating it and serving you in a pleasant environment. Yes, you can buy a steak for less at Kroger than you can at Pat’s, but you’ll have to do a lot more work.

Wine? They pull the cork and pour. There’s not much value added there.

Nevertheless, the standard is simple: Multiply the wholesale price by three (which amounts to doubling the full retail price) to set your wine list price. Don’t like it? Order a Coke or iced tea. But don’t ask how much profit comes out of that glass. The bottom line: Bar profits can make the difference between survival and failure. Pay up, drink up, enjoy.