Posted on: Wednesday, July 3, 2002

VINTAGES
Restaurants deserve to charge more for wine

By Randal Caparoso
Advertiser Wine Columnist

There are definite advantages to shopping in a retail store that specializes in wine, as opposed to just picking up whatever's on sale at a supermarket or discount warehouse.

The big advantage is service: Wine stores are staffed with people who know how to help you. Go in and ask what champagne you should ply your sweetheart with tonight, with caviar and blinis, for just $25 and change, and a good retailer can place the best possible bottle in your hands in seconds.

Specialist wine retailers work hard at what they do — not only wheeling and dealing for the best buys, but tasting and reading all they can between all those long hours straightening out the racks.

The only drawback is that much of the expertise American retailers profess to have comes directly from the major critics: Robert Parker's Wine Advocate is a major influence, and so are Charles Olken's Connoisseur's Guide to California Wine, Stephen Tanzer's International Wine Cellar, Wine & Spirits, and of course, the Wine Spectator.

You cannot blame retailers for relying on a few narrowly defined palates to sell their wine because:

• They say it is the consumers, not the retailers, who give credence to the major wine publications.

• It makes sense to pay some attention to the critics, since these are the guys who travel around the world, study and write full time on wine; and for all the work a retailer has to do in his own store, the information supplied by writers is invaluable.

The danger, as retailers will tell you, is that you cannot rely on the taste of a few writers to form your own. There have been more than a few big-time collectors who bought heavily in certain wines based upon published scores and recommendations, only to turn around and discover, a few years later, that the wines they spent a few thousand (or even hundreds of thousands of) dollars on really are not to their liking!

But ask the average retailer what he or she thinks about the way wine is sold in restaurants, then you see the fangs come out. I don't even like to walk into stores anymore, for fear that the owner or manager might find out that I used to write wine lists for restaurants. One merchant opined that restaurant wine buyers have a "stupid bone" that the rest of us don't have.

And here's another harangue — which I call the "hand-over-fist" story — that I hear from time to time: "I know a restaurant in such-and-such city that sells wine at minimum markup — practically at retail! — and they're selling so much that they're making money hand over fist. What's wrong with you guys? No wonder your business is so bad!"

So what is a restaurateur's alibi? Why are average restaurant wine prices usually so much higher than in retail stores? First of all, no excuses. In retail stores, wines generally are marked up 25 percent to 35 percent over wholesale cost, whereas in the average restaurant, wines typically are marked up to three times the wholesale cost. So a wine that wholesales for $10 typically retails for around $14, and the same wine goes for $30 in a typical restaurant.

Look at the staffing costs

Is this fair? Look at it this way: The half chicken you buy in the grocery store might cost you $3, but if you go to a restaurant and order the same thing, it will usually cost $12 to $15 — more than four times the retail price of fresh chicken. You can argue that chicken has to be cooked, thus justifying the price. But take a look around at your average 100-seat fine-dining restaurant, and what you see is a maitre d'hotel and two hostesses at the door, six waiters backed up by another six bus people, five cooks, two prep cooks, a pastry chef, a dishwasher, two valets and an impeccably schooled but temperamental executive chef ready to bolt if her salary is not soon raised.

Take a walk into your average retail wine store and all you see is one cashier, one manager, two or three sales people and maybe two stockers. That's it. Buy a wine from a retail store and you're certainly not going to get the use of a plush chair and table with tablecloth, crisply folded napkins, fresh flowers, silverware and glasses, plus someone to clean up after to you. With the cost of all this, it's no surprise that some restaurants (the ones that use the finest china and crystal, and are staffed by armies of high-salaried chefs, managers and sommeliers) mark their wines up as much as four times.

But even though it's usually the most popular — and exclusive — restaurants that mark their wine and food up the highest, these restaurants are just as likely to go out of business as any other. Why? Because their costs aren't always managed well enough, and they fail to make a profit. In other words, they may not have marked their wines up high enough! An extreme example of this can be found in France, where it's almost sacrilegious for super-luxury, Michelin three-star restaurants to be profitable (which is why so many of their proprietors also own hotels). In France, a multi-star restaurant is expected to be so good, and so lavish, that it can't possibly make a Euro.

At the same time, at the lower end of the fine-dining scale, more than 25 percent of new restaurants in the United States go out of business within a year; by the third year, it's about 50 percent. And this is not because of the way they sell wine. Consumers simply do not judge a restaurant by how low or high the wine markups are. Their opinion usually is formed around food and service, and perhaps ambience or location. If you aren't good enough, you go under. It also has been theorized (especially by grumpy retailers) that the reason so few Americans drink wine regularly (less than 15 percent of us, last I checked) is because restaurants discourage this with their high markups.

Fractured logic

I fail to see the logic in this, since most Americans buy most of their food and drink in retail stores, not in restaurants. If most Americans are still failing to catch on to the joys of wine, surely retailers share even more of the blame than restaurants.

Still, most specialty wine stores as well as many supermarkets do a magnificent job of merchandising and encouraging consumption of wine.

But here is a lot of room for improvement. I think wine merchants, in particular, could be friendlier, a little more eager to help and a little less snooty. I have been just as intimidated in retail stores as I have in fancy restaurants with sommeliers.

Restaurants? I wish markups were kinder, staffs more knowledgeable and the wine selections more varied and food-friendly. I also wish sommeliers — God bless their "stupid bones" — were better appreciated for their knowledge and given freer rein to do what they do well and love the most, which is discovering and sharing new, exciting wines.

As for wine journalists: I wish they would take food compatibility more into account. Wine is not meant to be judged in a vacuum, especially since most consumers invariably will enjoy the writers' recommendations with a fork and knife, not with a pen and scorecard!