Last Friday’s Wall Street Journal carried this article by Juliet Chung about how and why restaurants price their wines as they do. As usual (and as deserved), Las Vegas comes in for a fair amount of attention for the (some would say unfair) pricing of its wine lists.
Uber-wine-guys Stuart Roy (of Caesars), Henry Davar (Carnevino) and Rob Bigelow (former Wine Director of the Bellagio), are quoted, and ELV actually learned something when reading: many restaurants have yanked their wine lists from their websites as more and more independent websites have posted these lists. Apparently, having everyone know how much you charge for wine is not something restaurateurs want everyone to know. Translation: let’s make sure we have the fish in the boat before we fleece them.
As enlightening as the article is, ELV questions the observational skills of any reporter who describes the ambience of Carnevino as “luxurious.” Other than that, the article is a must read for anyone who orders wine in restaurants.
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Merci beaucoup, muchos gracias, xie xie, and molto grazie to Good Wine Friend Mary Scodwell (the prettier half of the Scodwell & Scodwell Wine and Food Tasting Team), for bringing this article to ELV’s attention
Nice article, I haven’t been to Vegas but I can only image the prices one would have to cough up for a decent bottle. I’m trying to make it out there for my 25th so I have been searching around a lot for information and one place that provided so far the best was AnswersTV.com. The have an episode on Vegas which was pretty useful, then they have a wine section which is probably the most information section on their site. Definitely worth a look for wine guys or people interested in visiting Vegas.
Thanks for the post and look me up when you get out here!
This is a topic that I love to see come up time and time again. The truth is we do mark up wine as we mark up everything else. To some its a 300% mark up but to us it’s only a 33% cost which isn’t great. Even as an industry professional I have a hard time buying a wine at a restaurant when I know its real cost. I tend to move to the higher price points because of the idea that there is less of a mark up on these bottles, making them a better value. I also like to put this argument into perspective. The steak you ordered certainly did not cost $40-50 to make even with its accompaniments. But then again you are not just paying for the steak are you? You pay for the food, the chef that cooked it, the service (waiter, busser, runner, expo, manager), the ambiance, etc. So even though your steak actually only cost $7 that is not the only cost on your plate. Everthing you buy as a consumer has an industry defined mark up, why pick on wine? Would you be shocked to find out how much that $1.50 bottle of soda cost? $0.19!!! Wow that’s a 760-ish% mark up form producer to consumer. There are many other senerios to investigate other than the cost of wine in restaurants, why WSJ wastes their time on us I’ll never know!
Good point and good post. But consumers don’t know what Target paid for the clothes or housewares they buy there, and there isn’t another market for those bluejeans or soda pop where you take that RETAIL price, and then double or triple it simply because the product is being purchased in a different location.
It’s that simple extra step/markup that galls wine drinkers so. It isn’t present in any other retail industry, and restaurants take advantage (with their markups) because they literally have a captive audience.
A great debate to be sure…and thanks for reading and posting. JC
Don’t be so thin skinned “industry professional”. Nobody is picking on wine. We love wine. The WSJ is pointing out ways for it’s readers to be better consumers. Part of the job of media is to inform people on ways to better their lives. Sure everything is marked up at a restaurant, this article happens to spotlight wine. Maybe the next goes into steak. Even if they don’t the points in the article are valid and it does not hurt for the patrons to be better informed. Perhaps if people realized they were being ripped off maybe they would reconcider what places they eat at. For example, I was waiting to be greeted by a server at a certain Bellagio restaurant looking over the wine list when I noticed a rather well known bottle of Reisling (Chateau St. Michelle) being sold at over $20 a glass. That is bull. We all know it’s a rip-off, especially for that. I was rather put off by it. If they think they can get away with that it makes me question the value of the whole place. Needless to say we walked. The real issue is not the mark up, it’s that everyone accepts it. If more people called a manager over and complained maybe things would change, problem is people have gotten the notion that if you complain in a restaurant your rude. Grow a spine people don’t be afraid to voice your displeasure or even choose to take your business elsewhere. If you feel your being ripped off COMPLAIN about it. Walk out and on the way grab a manager and tell them exactly why your leaving. If enough people say no. . .well, that’s probably wishfull thinking. It may be because I spent so many years in the business, but I have no problem telling a waiter, bartender, even a manager or chef that they suck.
And as long as we’re talking about wine flim-flammery….whaddya think of the bogus Wine Spectator “awards” expose?
Trying to be objective, I think wine is such a status and “value-added” commodity (at the retail level), that consumers carry a lot of resentment about what they’re being charged when they’re forced to confront the hyper-inflation of a restaurant’s wine list (especially a Vegas restaurant wine list).
The only analogy I can come up with (can anyone make a better one?) is a shopper going to an upscale mall and finding products priced at 2-3x’s what he/she usually pays for the identical goods somewhere else. Yes the shopper would like to shop there, and yes, they’re free to buy the same goods elsewhere for far less $$$. But the fact is, they are in that mall at that time and they’d like to buy a certain item that they know is priced way above it’s usual value. Of course they’re going to be unhappy about it. Add to the fact that at that upscale location, those goods are part of the experience (as good wine is to good food), then there’s bound to be resentment. Try as I might in over thirty-five years of dining in the best restaurants in the world, I still don’t accept the 2-300% markups restaurants try to justify for wine.
From a business standpoint, they do it because enough people have enough money to pay the outrageous prices to offset those who won’t. And even if they cut their prices in half, they probably wouldn’t sell any more bottles (or make any greater profit), so restaurateurs let the big spenders set the pricing for the small fry.
In a perfect world, you wouldn’t have the mandatory three-tier distribution system in the U.S. (that works solely for the distributor’s benefit and adds an extra level of cost to every bottle), and customers would be free to buy and bring their own wine into every restaurant, without fear of being denied the right or being charged “corkage.” Then you’d see restaurants pricing their wines competitively. ELV isn’t holding his breath.
There are two seperate issues here, yet somehow they are connected. Restaurants overprice wine simply because they can. Nobody wants to upset anyone anymore. People are too polite. Nobody complains. You go to a restaurant and accept that the price is it. Urban legends about “paybacks” for complaints have left diners with the sense that if they don’t accept it they will be punished in some way. You have all heard it, “don’t complain, don’t mess with the people who handle your food.” Voice your complaints at overpricing and visit those places who know how to give customers value (Marche Bacchus comes to mind). But I, like ELV, will not hold my breath. As for the wine mag, I wish I was surprised. First and foremost it sloppy, shameful, and unethical journalism. Maybe I am giving too much credit calling them “journalists” but if your going to print info as fact, while purpoting to be an “expert” the least you can do is follow up. It’s sloppy and lazy, but again no surprise. I know the food savey readers of ELV are sharp enough to see through that crap and I advise them to mock hardily anyone (merchant or restaurant) who displays a wine spec rating with pride. Obviously the high marks are meaningless. This should be brought to the attention of everyone.
Dean, you do make a great point. You should complain!!! I do, but it is very rare when other people do. That is why the better people in the industry treat those complaints as a precious commodity rather than with distain. I don’t agree that there will be any kind of retribution for complaints; fact is, if you truly think that then you are at the wrong type of place. Those horror stories stem from a less ethical and professional types of business of which you are unlikely to find on the strip.
I would agree that the mark ups on wine are very high in Las Vegas and primarily stems from a captive audience. When I hear things like $20 for a glass of Chat. St Michelle then I’m certain they are price gouging. The problem is when companies have a cost percent they have to meet, say 25% for beverage. That is the number given to management that they have to meet and they get bottles in and do a standard mark up. There are several problems with this, the first being the actual metric of 25% cost. Where does this number stem from? Most managers don’t know why that is there number and in fact most directors and VP don’t know where these numbers come from (most will give an excuse of “industry standard”). Next, the manager just meets the number rather than trying to create value for the guests. There a plenty of wines out there that you as a retail consumer can not get at any specialty store. It takes time, research, exploration and a certain amount of ambition for the beverage managers to get those products but instead they take the easier route and take the best “deal” on what ever there supplier is pushing at the time. The last major flaw in this line of thought is that there are product mixes that skew costs; is it better to make $20 on an item that has a 38% cost or make $7 on an item with a 30% cost? Most managers can’t answer that question…..
…..by the way, one of my favorite gastropubs back home only put a $10 mark up on any bottle it sold. Needless to say they sold a lot of wine….
Now, about the WS awards….. They had meaning at one time and the magazine stood for something but its reputation has been tarnished many times in the recent years. Truth be told, the accolades are a great marketing tool for restaurants but they are a bit of extra nonsense when it’s the Award of Excellence or distinguished honors or whatever. Maybe if the James Beard House gave us a category for wine list in addition to their Wine Service Award….
I don’t think I understand it.