During the 1980s, when Nick was a successful restaurateur, we would argue about the wine prices. I would lobby for the lowest possible prices, and perhaps the same cash mark-up on all bottles, to encourage sales and experimentation. He would point out that a restaurant has only two sources of income – food and wine – and diners are more familiar with the price of food than with those of the thousands of different wines. ‘You can’t bank percentages’, was my refrain. With rising costs and a shrinking labour force, restaurateurs worldwide are under more pressure than ever and restaurant wine prices seem to have risen considerably, so I thought I’d compare national wine pricing policies.
Wine lovers, head to Spain. Or Italy. Restaurant wine prices there are so much lower than in most of continental Europe, and definitely lower than in the US, UK and much of Asia.
Even in Australia, which used to be the land of BYO (see below), things have been changing. Kavita Faiella was a high-powered sommelier in smart resorts throughout Asia before going back to her native Australia 10 years ago. ‘When I first returned to Oz, a x3 mark-up was the ballpark for the more serious Sydney restaurants paying premiums for real estate. It was also generally understood that a sliding-scale formula was applied, so the more expensive the wine you were drinking, the smaller the percentage mark-up, as they were obviously making more dollars on the total sale. The sliding scale (sadly) happens less and less, and today it is not uncommon to see 5x mark-ups in Sydney CBD [central business district] venues. Eye-watering, I know!’
It is generally agreed that the basic rule of thumb in London is to charge three to four times the ex-VAT price paid to the supplier, equating to between two and three times retail price, although the percentage mark-up on expensive wines is lower in places without a regular clientele of millionaires and which actually want to sell these bottles. London wine lists tend to be more expensive than those in provincial establishments which have lower rents and more storage space so don’t need multiple deliveries every week.
Of course these mark-ups seem iniquitous to most wine drinkers, especially those armed with a smartphone that can easily show retail prices, but restaurateurs have been hit hard by increased costs. According to a statement at the beginning of this month from the UK hospitality trade bodies, one third of the businesses they represent are now operating at a loss, 11% more than last quarter.
Things are just as bad, if not worse, for wine drinkers across the Atlantic. A prominent observer of the New York restaurant scene reports that, while 10–15 years ago most restaurants used to mark up the prices they paid their wine suppliers three times, the more usual multiple today is four, with some restaurants even charging five times cost price. ‘The percentage mark-up model makes sense from a finance standpoint but it is spitting out some pretty shocking restaurant pricing these days – Beaujolais well into three digits, straightforward Mâcon over $100 as well. I don’t believe anyone is trying to be greedy necessarily, just following the model they are familiar with.'
A higher mark-up is commonly imposed on less expensive but popular wines. Our Italy editor Walter Speller worked at Pont de la Tour restaurant in London in the early 2000s. ‘The margins calculated were roughly three times the distributor price but often much more for stuff like Pinot Grigio and Prosecco. I did this because I could then afford to apply lower margins to wines that wouldn’t sell, like Aglianico.’ It can pay wine drinkers to move up a wine list, or head for the unfamiliar.
The three-times multiple, four on cheaper wines, is also common in Japan, Hong Kong and Singapore. In France, many a Michelin-starred restaurant multiplies cost prices between five and even eight times. So how come Spanish restaurants can survive when they seem to be offering relative bargains on their wine lists?
Our Spanish specialist Ferran Centelles was sommelier at the famous Catalan temple of gastronomy elBulli for 13 years until its closure in 2011. He explains that although the three- or four- times multiple also applies in Spain, Spanish restaurants are generally offered wines at up to 30% less than retail prices to begin with.
‘But when it comes to higher-end wines, we can't simply apply the same multiple. If we buy a bottle at €40 and apply the same x4 mark-up, the final price would be €160, which would likely discourage many guests. Instead, we might sell that €40 bottle at €85, which is more acceptable for the customer. So, for expensive wines, the mark-up coefficient decreases, while for entry-level wines it increases.’ The goal is to work things out so that food and drink costs average about 40% of what they are sold for.
Centelles outlined a development that should please wine enthusiasts: ‘In wine bars with retail licences a different model has emerged. They often display the retail price online and simply add a corkage fee of around €8 to €15 if you drink it on-site. This hybrid model has become quite popular in recent years.’
Speller came to London from Germany. ‘At the end of the 1990s when I worked at Schwarzenraben, a super-trendy Italian restaurant in Berlin’s Mitte, my boss, Italian, did practically all the wine imports directly from Italian producers because the rent was such that the extra margin taken by Berlin importers would further erode the profit margin.’ But the bureaucracy involved in direct imports to countries outside continental Europe rules this out for most restaurateurs, especially in post-Brexit UK.
According to Speller, in restaurants in Italy, ‘The price of a wine is just double the price producers charge importers, distributors and restaurants as restaurateurs buy directly from source. This keeps prices extremely fair. Posher restaurants will triple the price as a rule. I am aware that most restaurants [in Italy], and certainly all trattorias, are in family hands and hence do not face extortionate rents.’ Presumably family-run enterprises are also sheltered to a certain extent from salary increases, and unrealistic demands from boardrooms.
With per-bottle prices rising and per-capita wine consumption falling, there has been a perceptible increase in fine wines offered and ordered by the glass, largely thanks to the Coravin wine-preservation system.
And there are other ploys. Some New York restaurants have moved to a flat cash mark-up rather than a percentage one in order to encourage diners to order wine. Hong Kong importer Altaya Wines has developed a programme called Passion for Burgundy, encouraging restaurateurs to go easy on their mark-ups by giving them attractive prices from top Burgundy domaines. According to founder Paulo Pong, ‘We believe it's the best way for great wines to be consumed rather than hidden in collectors’ cellars.’
I suggested to Barcelona resident Centelles that he must be shocked by the wine prices when he travels abroad. ‘Absolutely!’, he said, ‘Especially in places like the UK, the US, Japan, and other countries with high taxes. Every time I travel, I realise just how lucky we are in Spain, something that many locals take for granted.’ Lucky locals.
Some wine-friendly restaurants
Australia
Sea Level, Cronulla, NSW
Table Manners, Bronte, NSW
Hong Kong
Bar Cyclone
Silene
Zau Mei
France
Parcelles, Paris
Le Petit Sommelier, Paris
Clos des Sense, Bordeaux
Cul Sec, Bordeaux
Spain
Almadraba Park Hotel, Roses
Villa Más, Sant Felui de Guixols
and many, many more
UK, London
The Atlas
Chez Bruce
Le Colombier
The Draper’s Arms
Andrew Edmunds
Hawksmoor (£5 corkage on Mondays)
Hunan
Ken’s
Kitchen W8 (no corkage Sunday nights)
The Ledbury
Medlar
Noble Rot
Ten Cases
La Trompette
Trullo
US
Chambers, NYC
Eulalie, NYC
Gramercy Tavern, NYC
The Modern, NYC
Noreetuh, NYC
Terroir, NYC
Rue Cler, Durham, NC
Berns Steakhouse, Tampa, FL
Nouvelle, Louisville, KY
Pappas Bros Steakhouse, Houston, TX
OK Omens, Portland, OR
Grasings, Carmel, CA
Nepenthe, Big Sur, CA
Passionfish, Pacific Grove, CA
Back to basics
| What and where is BYO? |
|
Bring Your Own (Bottle) originated in Australia and New Zealand in the 1960s and 1970s when licences to sell alcohol were much less freely given, so diners were encouraged to provide their own wine. In Australia today, BYO is still common in more casual suburban restaurants but customers will be charged, either per bottle or per drinker. Corkage charges per bottle can vary from AU$20 to AU$100 depending on the ambitions of the establishment. In Singapore, locals tend to expect free corkage in most Chinese restaurants. In the UK, many Asian restaurants allow BYO, but more widely it’s a matter of individual negotiation with the restaurant beforehand. Corkage charges can vary from about £20 to £100 a bottle. Quebec has a long-standing tradition of BYO. Pong reports that in Hong Kong, ‘BYO is stronger than ever. Business has been tough in the past few years with people spending less or going out less and therefore restaurants are desperate to put bums on their seats. But HK has always been a BYO-friendly city with only a handful of restaurants not allowing BYO. Corkage can be negotiated and sometimes waived. With no tax on wine, and no or low corkage in many restaurants, HK is one of the best places to wine and dine!’ |
For articles on eating out around the world, see Nick on restaurants.
Image credit Shutterstock.
