Restaurant Wine Margins On The Rise?

The economics of on-premise wine sales, or sales of wine by the glass and bottle within restaurants, is a topic we covered in several sessions this quarter. Entering the course, I was certainly guilty of the "second cheapest wine on the list" approach, and found the breakdown of margin across the three tiers of the supply chain particularly interesting. Ultimately, we learned that restaurants typically list a by-the-glass price on par with their wholesale cost, and a bottle typically at 3x their wholesale cost. Wine Searcher recently released an article on how restaurant wine margins have been on the rise. The article points out that, with the digitization and democratization of information regarding wine quality and value, restaurant customers (particularly fine dining customers) are more quickly able to sanity-check the list prices on a wine list than ever before, bringing a new era of scrutiny to sommeliers. The article goes on to note that several restaurants with degrading four-wall economics (rising rent and overhead) look to wine as a cost mitigation strategy, and approach 4x or 5x profit per bottle purchased. As coronavirus continues to impact consumer behavior and perhaps, negatively impact traffic and transaction volume at restaurants, it seems we will continue to see some establishments attempt to expand margins on their wine list to combat this effect.

https://www.wine-searcher.com/m/2020/02/the-relentless-rise-of-restaurant-wine-margins