The world’s most marked-up wines
We’ve all been there: you’re seated at a restaurant perusing the wine list when you come across your favorite bottle. You know you just saw that same bottle at your local wine store for $15 last week, but they’re charging $30 for it. How can this be?
Before you get upset, understand that typical restaurant wine markups are about two to three times per bottle, according to Restaurant Sciences, a Massachusetts-based research group that tracks food and beverage consumption in North America, and four times for wine by the glass. Retail markups for wine are generally 150 percent. So, if a bottle of costs $10 wholesale, you’ll likely pay around $15 for it at the store and roughly $25 at a restaurant.
“Nothing on any menu isn’t marked up,” explains Chuck Ellis, CEO and president of Restaurant Sciences. In fact, typical restaurant food markups are three to four times per item, and non-alcoholic beverage markups, like fountain sodas and coffees, are typically marked up six times or more.
So why do restaurants mark up their wine? To understand this, you must start at the beginning. Wholesalers first determine the retail price, known as the minimum bottle price, or the lowest price someone can sell that particular bottle for, explains Matthew Murphy, president of Do Valle, a Connecticut-based importer and wholesaler/distributor. “This price is based on a number of factors: wine region, varietal, winemaking process, winemaker, vintage, brand name recognition, (historical value), scores by wine critics, taxes, and even gas prices.”
When the restaurant purchases the wine, they must then mark it up again, as they have myriad costs to cover.
Some restaurants use a standard markup formula (all bottles get marked up 250 percent), while others charge a flat markup fee (every bottle is listed at $20 above retail). And some, particularly fine dining restaurants with sommeliers on staff, determine markups on a bottle-by-bottle basis. For example, Carlton McCoy, wine director at The Little Nell Hotel & Residences in Aspen, oversees a 20,000-bottle cellar, marking up each bottle individually to ensure an accessible and well-priced list.
If a restaurant operates this way, certain wines will command a much higher markup than others. Generally speaking, wines that command the highest markups are very rare and highly collectible, says McCoy. “It’s pure supply and demand economics—if a wine is almost impossible to find, like a bottle of 2010 Domaine de la Romanée Conti Le Montrachet, it’s going to be marked up a lot.”
And when supply is limited and demand is high, each person along the way—the importer, distributor, and retailer or restaurant—has to take a cut. “At this point, it’s not about the quality of the wine anymore, it’s about status,” says Juan Carlos Flores, Wine Director at Capella Pedregal in Cabo San Lucas.