Friday, January 13, 2006

Restaurant Wine Pricing

This is one of my pet peeves too!

Dan Berger at the Napa Valley Register is fed up and he is not going to take it anymore! Read his full article here.

On Wine: Gouging at restaurants

By Dan Berger

Thursday, January 12, 2006 12:40 PM PST

Restaurant owners almost universally detest columns like the one you're about to read, but if you are a patron of one of these places (and this applies to about 95 percent of restaurants that carry wine), then you'll agree with me: Restaurant wine prices are far too high.I've written about this maybe 50 times in the last 30 years, but nothing seems to change. And diners have only themselves to blame. They seem never to tell the restaurants their displeasure at seeing a $15 (retail) wine marked $45 on the wine list.

Econ 101 tells me that there is an optimum price of a "widget" where unit sales and profit margins are maximized. And I don't think it's at 2 or 3 times retail. If wines were priced closer to retail I think patrons would buy more bottles and also buy more expensive wines to go with the fine dining. Hopefully the food IS good!

Dan is right though, restaurant patrons need to vote with their wallets and feet, and also should voice complaints where warranted. A cynical friend told me that wines are priced too high because the restaurants don't want you to buy wine by the bottle. They want you to buy liquor, beer and wine by the glass because they make more money. I am usually not that cynical but maybe he has something there.

I don't see much changing though except for a few enterprising restaurants who want to stand out from the crowd and get a reputation as being a very wine friendly place with a current, diversified (that means not having 5 California Chardonnays) wine list that is about $10 over retail.


Anonymous Anonymous said...

As a real economist, I can tell you that individual parts can take on "value added" when properly paired with other parts. Perhaps food and wine work that way, as well.

A widget is not just a widget when it creates value over and above the cost of the part.

Additionally, the value proposition for a restaurant is that the restaurateur can cook for you AND provide the wine AND clean up afterwords AND provide a stimulating environment, all for just a fraction above the price you could do it for at home... if you happen to know anything about wine, have the room to store it AND the capital to buy hundreds of different labels.

Oh, yeah... that doesn't include remodeling your apartment or any actual stylistic talent on the chef's part.

People who enjoy fine dining are saying it's worth it to them to have someone with special talent provide the atmosphere and vinosphere in the restaurant.

12:38 PM  

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