The Percentage of Your Restaurant Wine Bill That’s Pure Markup, According to 7 Sommeliers
Unlike food or cocktails, where the added value from labor and preparation is obvious, buyers are often left in the dark about what goes into wine markups.
“Wines from more established regions can generally support a slightly higher markup because guests are familiar with them and the demand is often stronger,”
Master sommelier and partner in Houston-based Goodnight Hospitality June Rodil says the economics of restaurant pricing is a topic that many fail to recognize when comparing on-premise costs to those at retail shops. Good service is just the surface, and the guest is paying for all that’s beneath it.
To shed some light on how these markups are determined, we asked beverage directors and sommeliers from seven markets to share how they calculate their menu rates.
Denver
Venue: Apple Blossom Percent of bill that’s markup: 60 to 70 percent At Apple Blossom, a seasonally focused restaurant in Denver with a robust wine program, beverage director Kinga Mackowiak includes factors like glassware, credit card fees, and labor when determining the markup. The cost of the latter, she states, is less drastic than it would be for cocktails or food, where the work that goes into preparation is more extensive. In general, 60 to 70 percent of the listed menu price on a bottle of wine is markup, Mackowiak shares. Altogether, she estimates Apple Blossom takes 38 to 48 percent of the bottle’s sell-off rate as a earnings. However, she does not follow an established playbook for wine pricing. Mackowiak instead evaluates how likely the wine is to sell, at what frequency, and how it matches the other prices on her list — even if that means keeping inconsistent earnings margins. For he
Fairhope, Ala.
Venue: Deep Roots Restaurant Group Percent of bill that’s markup: 76 percent William Jones, beverage director for Deep Roots Restaurant Group, which operates a number of venues in Fairhope, Ala., says his bottle markups vary by location, but the average bottle across the hospitality group accounts for 24 percent of its menu rate making the average markup 76 percent. Overall, Jones aims for a prime cost of 58 percent, accounting for glassware, labor, insurance, and other team expenses, meaning the restaurant group makes around 42 percent in takings per bottle. But that’s just the goal, and a number of external forces in recent years have thrown wrenches at that aim. “With tariffs, raising costs across the board, and heightened labor costs, it is harder than ever to reach these goals,” Jones says. The pandemic in addition warped how Deep Roots calculates its pricing. “We have had to tighten marg
Charleston, S.C.
Venue: Renzo Percent of bill that’s markup: 75 percent At Renzo, a natural wine and pizza hub in Charleston, S.C., beverage director Nayda Freire marks up the wines on her bottle list anywhere from two-and-a-half to four times the original rate. The typical bottle, however, falls at the higher end of that list, meaning Renzo’s average markup accounts for 75 percent of its final cost. Like most beverage directors, Freire does not follow set-in-stone guidelines for coming up with her wine program’s final quotations. She explains bottles with a lower initial quotation receive higher markups, whereas the costs of already-expensive bottles are just slightly secured. Freire finds that offering bottles across the rate spectrum combats the rising costs affecting the industry. “So many of our costs — such as insurance, glassware, labor, and technology — have gone up quite drastically and in some cases unpre
Boston
Venue: The Nautilus Percent of bill that’s markup: 75 percent In a “good year,” Boston’s The Nautilus shoots for a four-times markup, whereas markups in a “bad year” are closer to three-times, per to co-founder Stephen Bowler. (In a good year, 75 percent of the bottle’s cost is markup, and in a bad year, 66 percent of the final cost is markup). Deciding on wine pricing at The Nautilus begins with setting a goal for how much wine takings should drive the restaurant’s total earnings in a given week, month, and year: Bowler explains he and his team aim for wine purchases to account for 25 to 30 percent of the business’s income. Bowler considers how exclusive or allocated a wine is, its consumer buying interest, its wholesale cost, the style of wine, and its likelihood to sell, when determining where a given bottle should fall price-wise. Other factors include labor costs, storage, appliances, decan
Phoenix
Venue: Kid Sister Percent of bill that’s markup: 70 percent The base cost of a bottle at Phoenix-based natural wine bar Kid Sister, generally translates to 30 percent of its menu rate and the remaining 70 percent is markup. But general manager and beverage director Courtney Lewandrowski states the bar operates on a 5.76 percent net surplus margin. That means roughly 64 percent of a bottle’s cost is spent on operational, labor, and other costs. As a wine bar with a focus on niche, low-intervention growers, Lewandrowski hopes to keep quotations reasonable for consumers to explore new regions, grapes, and bottles, and low enough to retain customers. “Our bottle pricing decisions are driven more by accessibility and a belief in the long-term health of the industry than by a set formula,” she explains.
New York City
Venue: Long Count Percent of bill that’s markup (by-the-glass): 80 to 82 percent At Long Count, a wine bar dedicated to pouring bottles with 10 years or more of age, wine director Drew Brady determines pricing based on his profit margin goals for the program as a whole. Altogether, Brady estimates that the total cost of Long Count’s by-the-glass program is 80 to 82 percent markup, the total amount that the bar makes on the glass list before including operational costs. Industry convention is to sell one glass at the bottle’s wholesale rate. Brady does not follow that rubric. “We often price well below that rule on the more unusual or rare wines because accessibility is part of the program,” he explains. “That lets us pour special projects, cult producers, intensive farming experiments, and rare or unfamiliar varieties at prices that encourage guests to take a chance on them.” To accommodate
Houston
Venue: Goodnight Hospitality Percent of bill that’s markup: 55 to 70 percent At the concepts under Houtson’s Goodnight Hospitality, Rodil similarly uses a sliding scale to determine how much to markup a given bottle. Depending on the bottle, she aims for its wholesale price to account for 30 percent to 45 percent of its menu cost. That means the bottle markups can account for anywhere from 55 to 70 percent of the final price. Rodil is constantly assessing each restaurant within the hospitality group’s margins and targets and comparing them against the necessary costs to run the businesses, including labor, waste, Coravin tools, storage space, appliances, insurance, and stemware, among others.