Why do you have to pay so much for a bottle of wine in a restaurant?

Are all restaurant owners greedy?

This week, Uncorked exposes the reasons for markups between 300 and 400 percent in restaurants, explains the rationale and talks about a world with reasonably-priced wine lists.

How often have you walked into a restaurant, opened the wine list and stared wide-eyed at the seemingly ridiculous prices?

You scan down the list, looking for one or two of your most recent favorites, find them and can't believe that the restaurant wants $125 for the bottle you paid $35 for last week.

What is the meaning of this ridiculous markup?

Well, before we go and lambast all the restaurants in Milwaukee -- and for that matter around the world -- let's take a look at why those prices are so high.

The reason higher markups were invented was simple. Restaurateurs wanted to put together a quality list of wines that may or may not be available elsewhere. They wanted to have depth of selection, which included range of price, varietal, origin, etc., and they wanted it to represent the quality and high standards of the restaurant.

In order to build such wine lists, the owners had to invest quite a bit of money in a product that wouldn't move very fast. Imagine an initial investment of $200,000, or even more. The vast majority of that money is tied up in inventory and the owner sees very little return on that investment. Not only that, but with such a huge amount of wine, owners have to pay at least one full-time employee just to manage it. Consequently, the revenue earned from the total sales of wine each month has to be enough to justify the expense. Hence, a markup of 250 to 400 percent, depending on the size of the establishment and the volume of sales, became largely standard in the fine dining arena.

This markup made possible wine lists that brought you, the consumer, a wide range of choices, rare selections, older vintages and choices that you would otherwise not be able to consider, much less enjoy.

Unlike retail outlets which seldom have older vintage products, let alone a wide range of them, restaurants prided themselves in the depth and range of vintage and selection of their lists, all the while keeping the markup somewhere in that 2.5-4 times range.

Typically, however, the lower-priced bottles see the highest markup, which makes it difficult for the average spender to find a decent bottle within his or her price range. But, with some of the best restaurants in the world carrying million-dollar wine inventories, don't you think it's only fair to sell accordingly?

That's one side of the story. One can understand the rationale behind it, and at least there are specific reasons, none of which help your pocketbook at all. If you spend good money for a great bottle at a retail store, how fair is it that in order to drink the same bottle in restaurant, you are required to pay so much more for it?

The only trouble I really have with high markups is the fact that the lower-end restaurants followed the high-end business model and began marking all their product up, as well. The practice of selling a glass of wine for the same price that the bottle cost at that level is ridiculous, but unfortunately common. I will be kind and not name the multitude of restaurants around town that pawn off mediocre glass pours at markups of close to 400 percent. Come on, a $7 retail bottle = $28 or more in a restaurant? Absurd. If a restaurant is going to mark wines up that high, they should be items that are difficult to get, and for which the restaurant paid a premium.

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15 comments about this article. Post a comment / write a review.

Recent Talkbacks ...

Posted by yvonne8753 on July 31, 2009 at 4:09 p.m. (report)

Hey, what's wrong with Franzia??

Posted by cowboysteve on July 31, 2009 at 2:41 p.m. (report)

If you can't afford it don't buy it. Really, if you want to look at real scandal examine the MUCH MUCH HIGHER mark up on run-of-the-mill cocktails and those oh-so-fabulous martinis! Or how about how advertising dollars (maybe even on this site!) take up TONS of the restaurant budget! Some of you people think everything is free; it isn't! Maybe for those that are looking for "affordable" wine will soon see McDonald's add wine to their value menu! Mmmmm! Hamburglar Merlot!

Posted by rob on July 31, 2009 at 1:16 p.m. (report)

I have to chuckle at the wide range of comments on this article. The majority of you wouldn't know a "good wine" if it slapped you in the face. About 2-3% of you drinking "good wine" are oenolphiles - the rest are just drinking wine because they like how they taste. As for the price of wines, remember you don't have to spend alot to get a "good wine". Most "good wines" are under $15 a bottle. l However at restaurants you do pay much, much more for a bottle of wine as well as a glass of wine. I'm behind those folks who are cheap - this is Milwaukee and we don't spend, spend, spend!!!!

Posted by clnwly on July 31, 2009 at 12:27 p.m. (report)

I've often paid good money for excellent wine. What I AM tired of , if I'd just like one glass, is the growing, tiresome trend of receiving a 4 ounce pour of average wine and being charged 8 or 9 dollars.

Posted by alba on July 31, 2009 at 10:52 a.m. (report)

Which restaurant's in Milwaukee let you bring in your own wine? Some cities have laws that require that the restaurants and bars list the price of all their drinks. I hate when I order a bottle of beer somewhere and it turns out to be $8.