What’s be­hind the wine markups?

The Witness - - FEATURES - KATY ROSE

A MARKUP of up to 300% on wine is com­mon prac­tice in restau­rants, but for the av­er­age diner it can feel like a rip off. We spoke to some restau­rant own­ers to un­der­stand bet­ter the logic be­hind high wine prices.

Glanc­ing at a wine list in an up­mar­ket restau­rant can be a stress­ful ex­pe­ri­ence. The list­ings can be long and in­tim­i­dat­ing. Din­ers of­ten em­ploy two strate­gies when un­sure about or­der­ing a wine — ei­ther se­lect by price (the sec­ond cheap­est bot­tle is usu­ally the most pop­u­lar), or se­lect a wine that they are al­ready fa­mil­iar with.

This raises the ques­tion, if my favourite wine costs R85 in the su­per­mar­ket, why does it cost R245 in a restau­rant? Here are some in­sights into the logic be­hind the seem­ingly shock­ing markup mar­gins, and also why you shouldn’t take your own wine next time.

It is the eas­i­est item to com­pare

A bot­tle of wine is the eas­i­est item in the restau­rant to com­pare like for like, for ex­am­ple on an on­line wine re­tailer’s web­site. It may be the only item on the menu that you can get any­where else, and it is hard to know the re­tail price of the chef’s seared tuna spe­cialty, for ex­am­ple.

Food is also marked up, but it is harder to com­pare

The dishes on the menu are also marked up, but of course it is much harder to com­pare the rand value when it comes to a plate of creamy pasta or your favourite choco­late mousse dessert. Food markups are of­ten ag­gre­gated across the whole menu so that cheaper cost items such as a salad, will carry some of the profit bur­den of the fil­let steak, which may only be marked up by 50%.

The food is ac­tu­ally quite cheap

In most restau­rants it is not al­ways easy to de­ter­mine just how chefs helped to pre­pare your meal. In an up­mar­ket kitchen, the staff in the back of house is al­ways the largest, with ap­prox­i­mately one staff mem­ber for ev­ery three guests in the din­ing room. Wine markups help to sub­sidise this heavy wage bur­den. This dis­par­ity is only ex­ag­ger­ated by spe­cial of­fers and dis­counts.

Liquor li­cences cost a lot of money

Ob­tain­ing a liquor li­cence for a restau­rant or bar can take months of pa­per­work, le­gal fees, lit­i­ga­tion and stress for the owner. The lawyers fees alone be­gin at around R12 000 per ap­pli­ca­tion, and of­ten end up be­ing closer to R25 000 af­ter all the ad­min­is­tra­tion work has been com­pleted.

You’re not only pay­ing for the wine

This is the old­est ar­gu­ment for the markup on wines, but it con­tin­ues to be as valid as ever. The markup is pay­ing for the som­me­lier’s ad­vice and ex­per­tise, which comes af­ter years of ed­u­ca­tion and train­ing. The cel­lar­ing and stor­age of older vin­tages is a lux­ury that comes at a price. Stor­ing wine in the cel­lar can im­pact the restau­rant’s fi­nan­cial sit­u­a­tion, where a large up­mar­ket restau­rant can eas­ily have up to R100 000 worth of cash tied up in ex­pen­sive wines and Cham­pagnes. That beau­ti­ful Chardon­nay glass? High-end glass­ware adds to the en­joy­ment of the wine, but re­mem­ber that a Riedel or Schott Zwiesel glass can cost about R350 each.

So what’s the deal with cork­age?

Wine markups are in in­te­gral part of the fi­nan­cial health of any restau­rant, so hav­ing a cork­age pol­icy is im­ple­mented as a de­ter­rent, in the hope that the penalty will en­cour­age guests rather to or­der from the menu. The cork­age charge is also in place to re­coup some of the losses.

Run­ning and op­er­at­ing a fi­nan­cially suc­cess­ful restau­rant is a chal­lenge. Newer restau­rants pop up all the time, and dur­ing the qui­eter months of the year it can be a con­stant strug­gle to en­tice din­ers through the front door. It is a fact that al­co­hol sales keep restau­rants open, so if you have a favourite restau­rant in your neigh­bour­hood, con­sider sup­port­ing it by or­der­ing off the wine list. It will make all the dif­fer­ence. — Food24.

Din­ers of­ten em­ploy two strate­gies when un­sure about or­der­ing a wine — they ei­ther se­lect by price or se­lect a wine that they are al­ready fa­mil­iar with.

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