Why are Wines More Expensive at Some Restaurants?

Can’t understand why the $10 bottle of wine you bought at your local wine shop costs $30 at one restaurant and $25 at another?  Wine Enthusiast Magazine has an article on the reasons why wine costs so much more at restaurants and why that price can vary among wine lists.

In “The Lowdown on Restaurant Markups” author Gretchen Roberts explains how and why restaurants charge more for their wines (besides it being an excellent source of revenue).  The higher costs and variations come down to a mix of five factors:

1. State Laws and Taxes
Wine prices vary in each state due to different alcohol laws and taxes, with higher costs of purchasing the wine passed on to customers.

2. Wholesale Costs
These can vary by state as well, with some states allowing restaurants with bigger buying power to get lower prices for wholesale wines.

3. Restaurant Operational Costs
Basically this boils down to the nicer the restaurant, the more expensive the wine.  If a restaurant spends less on operational costs (decor, valet, etc), they may be able to pass on the savings to you, via the wine list.

4. Position on the List
Cheaper wines tend to have higher markups than more expensive wines.  As the article states, “a $10 wholesale wine may be marked up to $30, but a $50 wine might be just $80.”

5. Whim
Prices can vary dramatically due to the desires of the restaurant’s sommelier or manager (or whoever sets the prices).  Some places may price wines lower and make money from more frequent sales, while others will price wines higher, making more money on fewer sales.

The article also has some helpful tips on how to get the best value on the wine list:

Spend More
Because many restaurants mark up high-end wines less than lower-end wines, you’ll get more value if you choose a more expensive bottle of wine.

Order Mid-List
People often skip the least expensive wine because they don’t want to appear cheap.  Because of this restaurants often have the largest mark up on the second-least expensive wine.  Try one a few spots up for a better value.

Stay Away from Brand Names
Popular wines tend to have a high mark up because they always sell.

Be Adventurous
Restaurants will sometimes put a lower mark up on wines they don’t think will sell as well, so go ahead and order that unfamiliar varietal!

Spending upwards of 100% more on a bottle of wine just to be able to enjoy it in a restaurant may not be any more palatable after reading this article, but maybe you’ll be able to make a smarter choice the next time you’re handed the list.

Click here to read the full article in Wine Enthusiast Magazine.