Are restaurants pushing wine for profit?
There’s an adage in the restaurant business that the reputation is made in the kitchen but the profits are made at the bar. Perhaps that should be refined to “wine cellar” instead of merely “bar” for the world’s top restaurants. The highest profits seem to come from selling wine, not mere booze.
In a fascinating and lengthy profile of Chef Gordon Ramsay in the New Yorker, Bill Buford let this nugget drop about the operations at Gordon Ramsay at the London:
“The [food] prices—the best value in New York—had been deliberately set low, Ramsay told me, to encourage people to spend more on wine, an upmarket restaurant’s greatest potential profit (no overhead, no spoiled ingredients).”
So is wine the REAL profit center at restaurants? One time Mrs. Vino and I were dining at Charlie Trotter’s in Chicago with another couple, one of whom ordered a gin and tonic. The waiter frostily told her that the restaurant serves no cocktails. Apparently it’s in the name of gastronomy since alcohol can deaden the palate. Chef Thomas Keller does not serve cocktails at the French Laundry in Napa either, although it has something to do with allegedly not being able to get the proper license.
Are gourmet restaurants pushing diners toward wine? In the New Yorker story, Buford reports on a group of hedge fund managers at the exclusive “chef’s table” who ordered $10,000 worth of food and wine. Another group from Goldman Sachs was set to take the table the following night: “budget not important,†was the word in the house. And at Petrus, a Ramsay restaurant in London, investment bankers famously ran up a $63,000 wine tab a few years ago (they later had to resign over it). That’s a heck of a lot of gin and tonics even at $20 a pop, the price at Per Se.
So is wine the real profit center at high-end restaurants? If this secret gets out, maybe mid-tier restaurants will start upgrading their wine programs. A wine geek can but hope.
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On a related note, Gregory Condes, who oversaw the acquisition of $750,000 worth of wine for Gordon Ramsay at the London, has been fired according to the Sunday Mail after a wild night. It could be an April Fool’s spoof, but it seems too harsh.
On April 2nd, 2007 at 6:57 am ,Mark wrote:
I think it’s definitely the case that restaurants steer customers towards wine, and also create wine lists that encourage more expensive purchases (nobody wants, after all, to be seen buying a cheap bottle of wine…)
The profits on wine must be astronomical. Even here in France, in restaurants within a few miles of the vineyards in question, bottles are habitually marked up by 100%, if not more. And when I’m in London, I often see bottles of Bordeaux wine that I know I can get retail for, say, £15 on the wine lists of restaurants for £40 or £50.
For one, increasingly, I’d rather stay at home, cook up some nice food of my own and spend 40 euros on a classed growth than pay the same in a restaurant for something inferior!
On April 3rd, 2007 at 3:50 pm ,Todd wrote:
Being from CA and having been in a touring band. I’ve talked shop with many a club and bar owner. There are a few different types of alcohol licenses one may wish to request for their business. Selling, pouring and or selling and pouring. Also there is a beer/wine license that is “easier” to get versus the alcohol/beer/wine license. So the French Laundry actually may be telling the truth. Plus, their in the heart of the Napa Valley. Wines a bit easier to get since they could drive 5 minutes and pick up a case or two.
On April 3rd, 2007 at 5:05 pm ,Adrian wrote:
I can definitely see the high profit margins on wine.
I guess this doesn’t fly in Australia… most restaurants allow you to bring your own bottle and have a cork fee. I personally love this policy, and wish it was adopted in the U.S. There is nothing worse than spending $50 on a bottle of $30 wine at a restaurant.
On April 3rd, 2007 at 5:57 pm ,Benito wrote:
I’ve railed about this on my blog before, but I almost never order wine in restaurants. As to the above comment, there is something worse than spending $50 on a $30 bottle of wine: around here I’ve watched markups go from 100% to 200%, and it probably won’t stop there. I’ve seen bottles that retail for $15 being sold for $45; and that’s not taking into account the wholesale or case discount price of the wine in the first place.
On top of that, it’s not unusual for a glass of wine to be equal to the retail price of a full bottle. I know restaurants need to make a profit, and markups on alcohol are an easy way to do that. The problem I see is when the price is so high that it keeps younger and novice wine drinkers out of the game entirely and helps continue the horrible notion that wine is for the rich and sophisticated only.
On April 11th, 2007 at 9:44 am ,Christian wrote:
As a percentage markup, the profits on cocktails are very high too. I’d guess higher on average than wine, based on the way they are pushed at many corporate mid-priced chain restaurants. However, aside from a some brandies and single malt scotches, there is a limit to how high the cocktail prices can go. Whereas for a bunch of tipsy investment bankers facing a wine list and coming off a big deal, there seems to be none.
On April 12th, 2007 at 12:11 pm ,Jack wrote:
Well, sure, those restaurants with high mark-ups on wine view the wine as the profit-center. I decided not to go to The Fat Duck outside London in a month because their high wine prices so turned me off. For example a 2002 Araujo Sauvignon Blanc is more than $225.
On May 10th, 2010 at 9:53 am ,Gordon Ramsay, Bruce Willis, Australia, re-fi — sipped and spit | Dr Vino's wine blog wrote:
[…] paying bills A few years ago, the New Yorker profile of Gordon Ramsay let drop the nugget that wine was the real profit center at The London. Now, in what is a sign of different times, two New York wine distributors, Wineberry […]