Are restaurant prices too high? Need I Ask? Post your thoughts.
A little over three years ago I wrote a series of columns about restaurant wine pricing for the Colorado Springs Gazette that generated the most interest and responses than all the columns I have written in the 12 years I have been a freelance writer.
It all started with a column summarizing the results of Wine & Spirits magazine’s15th Annual Restaurant Poll (published in its April 2004 issue) tracking the popularity and prices of wines in what the magazine described as “high-end American restaurants” in 2003. The poll was sent to the Zagat Survey’s “Most Popular Restaurants” listings on the not unreasonable assumption that these restaurants “reflect the range of dining in America.”
Here is what I wrote in the first column, edited to bring the data up-to-date.
According to the magazine’s publisher and editor, Joshua Greene, the survey results revealed a “sea change” in wine consumption trends, assuming the 350 responding restaurants are representative of fine dining in the U.S. The results showed an increasing diversity of regions and varieties on wine lists. The restaurants reported that diners have responded well to this growing diversity by becoming more adventurous than ever, experimenting with wines from southern Italy, Australia and other lesser-known regions over more familiar choices.
The poll (as well as the most recent poll in April 2007) also confirmed that red wine remains the wine of choice in American restaurants, at 60 percent of the most popular wines (up to 64 percent in 2007) compared with only 46 percent ten years ago.
There are a variety of other interesting findings in these polls but most interesting to me was the price consciousness of consumers, a finding the magazine described as “underscoring the consumer’s interest in identifying wines that present the greatest value in each category.
Yet, the polls reveal that prices remain high and mostly are even increasing. In the 2004 poll, nearly 40 percent of the restaurants reported an increase in wine prices. In the 2007 poll, over 60 percent said they have increased their prices.
I for one continue to be concerned about high wine prices at restaurants. Although, wine sales increased as a percentage of the responding restaurants’ total sales in both polls, restaurants may be missing an important opportunity to educate and excite consumers about wine and especially new types of wine. I suspect that lower prices (or at least a wider range of prices) would lead to increased consumption and higher sales.
High prices and unimaginative selections keep consumers from experimenting. Treating wine as a cash cow may be understandable from the point of view of a restaurant trying to make up for a narrow margin on the food. But high prices contribute to the mystification of wine and the perpetuation of the false notion of wine as elitist.
I am encouraged that consumers seem to be seeking good values more than ever before. Whether that trend is because of the economic squeeze or because diners are wine savvy (it’s probably both), hopefully restaurants will get the message. If more restaurants treated wine more as an integral part of the meal and priced it accordingly, both the diners and the restaurants would benefit.
I concluded the column asking readers (diners, restaurant owners and restaurant staff) what they thought.
The next column featured the readers’ responses.
“Boy, did your column today strike a nerve!!”
This statement pretty well sums up the readers’ reactions as they wrote to vent their frustrations about the prices of wine in restaurants. Interestingly, two themes were consistent throughout the responses:
Consumers take value seriously.
Consumers will seek alternatives when the perceived value is not adequate.
As for value, virtually everyone said they often feel bottle and especially by-the-glass prices are not justified by the quality, especially when they know the cost of the same wine in retail stores. Some even made rather precise price/quality calculations. Consider these representative quotes.
“What I object to most is the prices that ordinary, moderately priced restaurants are charging.”
“It would be lovely to have a glass of wine with dinner but I refuse to pay more for the glass than I would for the entire bottle at (a liquor store).”
“Why would we want to pay $80 to $90 for a bottle of wine that is way too young, probably not stored properly, and served in cheap wine glasses when we can enjoy that bottle at home for about $30?”
“It kills me to pay $6-7 for an approximately 4 oz. glass of wine when I know I could buy the whole bottle for $12.”
When faced with such challenges, consumers invariably look for alternatives. It seems many simply will stay home. Others will give preference to restaurants with better prices. Most trade down, buying a glass instead of a bottle or a lower priced wine than the one they really want. Again the readers state their positions eloquently.
“Good wine values are exactly what we look for, though increasingly it is becoming a challenge. In the meantime we’ll save that special ‘expensive’ bottle for home and the restaurant’s can continue without us.”
“I can tell you that a lot of times, if we’re going out to a nice dinner, we’ll have a good glass of wine here at home before we go out because the restaurants are charging so much for their wine.”
“We have changed our dining out patterns considerably…We visit restaurants less often nowadays because to spend so much money for wine that is just average is not worth it to us…We often bring our own wine (home) and get food from restaurants as carryout.”
“My girlfriend and I are so fed up with high prices, poor quality and selection, and un-knowledgeable staff, that we drink a glass before we go to dinner and then finish off the bottle when we get home after dinner.”
“In response (to the outrageous markup), I have selected less ‘high end’ destinations simply because I feel the difference in the food quality does not justify the difference in the price of the wine.”
“I think restaurants count on the fact that people like us will order regardless of the price. However, we will be more selective where we dine when we know the wine is going to cost the price of two or three entrees …”
“My wife and I eat out ‘up scale’ ….In each of theses places I find about two ‘by the glass’ choices that I would accept and have to pass on one of the full bottles.”
“Restaurant wine prices of twice (or three times) the retail price is ridiculous. We therefore forego trying the better wines at restaurants.”
“The bottom line is that if restaurants had a reasonable profit margin on wines, we would be willing to be more adventurous and try more premium wines.”
“We are tired of the high wine prices in restaurants. We do tend to feel forced to purchase ‘House Wines’ regularly even though we know they are mediocre.”
Finally, the readers had a few other interesting comments and suggestions. There was a lot of interest in a wider variety of choices – both in the types of wine and the range of prices. Readers also expressed concerns about wine service and the staff’s lack of knowledge about the restaurant’s wines. Several people reserved special contempt for the chains on these issues.
Certainly, these responses do not constitute a scientific survey of consumer opinions but the unanimity and emotion cannot be denied. Restaurants, are you listening?
I finished the series giving the restaurants their chance to speak and ending with my two cents on the subject.
I interviewed members of the Colorado Springs Independent Restaurant Collective – Jeff Mervis of La Petite Maison, Brent Beavers and Kristin Schaeffer of Sencha, Chip Johnson of the Briarhurst Manor, and James Africano of The Warehouse – and came away convinced these are some of the “good guys” in the restaurant community. Unlike national chains, these independents are more concerned with providing quality wine and food than simply maximizing the return on their investment. They emphasize fresh, local foods and are more community oriented, donating to fundraisers, farmers markets and so on.
Their wine lists also typically have much more variety of wines from different countries, grapes and styles on their lists than do the chains. They said they try to have a range of prices and provide good quality at all levels.
They said they too are appalled at the prices some restaurants charge, especially for wines by the glass. They don’t like being lumped in with those restaurants. And they don’t appreciate comparisons with liquor stores, claiming higher costs and less pricing flexibility. They point out that they are selling a total experience and environment for the diner.
But this isn’t the whole story. There is another model that deserves everyone’s attention. No discussion of restaurant wine pricing is complete without an acknowledgment of the pioneering approach of San Francisco’s PlumpJack Café.
When Gavin Newsom and his partners opened PlumpJack in 1994 they surprised the wine and fine dining worlds by selling their wine at only slightly above retail prices. Mr. Newsom couldn’t believe the mark ups in other restaurants and insisted that people ultimately will spend more if they get better value.
The result, according to Rob Goldberg (CEO) and Rose Gibson (General Manger), has been to cultivate a clientele that not only appreciates wine but also is very loyal. Newsom once told The Wine Spectator “PlumpJack makes money by selling higher volume and creating repeat customers.”
Gibson says, “Gavin was very clear from the beginning that we would make enough money; we don’t need to make tons of money.” Goldberg adds they “may have given up some profit for higher sales.”
Their plan seems to be working. PlumpJack is till around and busy every night, while many restaurants have come and gone since and the company now owns five other restaurants. And Gavin Newsom is San Francisco’s mayor, though I can’t prove his wine pricing policy is the reason.
“If customers look at the total check and feel they got a good value, they are likely to come back more often – we put money in the bank, not margin,” says Goldberg.I can’t help but see PlumJack’s approach as a model for other restaurants. I wish restaurants would do the following:
Offer bottle and half bottle prices close to retail
Provide a knowledgeable staff
Use high quality glasses
Offer a taste before purchase
Pour at least 6 oz. by the glass
Offer1/2 glass options
Offer flights
Offer wine and food pairings
Offer occasional bottle discounts
Pass on any cost savings to the customer
Then there is Fred Franzia. You may not have heard of him but he is responsible for possibly the biggest phenomenon in the wine industry in recent years – “Two Buck Chuck,” $2 Charles Shaw wines sold in Trader Joes stores.
Now he is stumping for a $10 bottle of wine in restaurants. He told The Wine Enthusiast, “Trader Joe’s became a destination retailer by providing this opportunity. You’d think restaurants would want to become frequent destinations for their patrons.”
Franzia’s crusade also struck a nerve with former New York Times wine columnist, Frank Prial. He once wrote about a bottle of wine he paid $18 for in a restaurant and then saw the same wine in a liquor store for $6. He concluded the restaurant could have sold the wine for $10 and still made three time more than they paid. Still Prial isn’t convinced the $10 wine will ever take hold. His solution is for restaurants to start offering carafes.
But consumers need to do their part, too. Prial asserts “In some ways, the high cost of wine is a problem we have made for ourselves: we take wine too seriously.” He goes on to say that it is fine to be serious about wine under certain circumstances but it is unnecessary for everyday drinking.
We diners need to be reasonable. We should appreciate that high quality and unique wines are likely to cost more than cheap, mass-produced wine. We also need to stop thinking inexpensive wine is always cheap quality.
Somehow I don’t think we’ve heard the last on this issue. For my part, I continue to seek restaurants that provide consumers with good quality at a fair price. For the rest, I’ll drink a glass of water before I will overpay for wine.
