Earlier this week, our newsletter for industry pros, Pre Shift, spoke to the city’s top wine buyers. Subscribe for more stories like this.
It’s hardly a stretch to suggest that rising wine prices are changing the way restaurants operate financially, and in turn, the way guests drink. When Punch surveyed New York City wine buyers back in 2016, it was common for bottle prices on restaurants’ lists to begin in the $30 range. When I undertook a similar research expedition this May, the price of entry was roughly double. Of course, those price bumps are not just about markups. They’re about marginal increases at every level of the production and distribution chain, from the cost of oak barrels and glass bottles to label printing, shipping, storage, at-cost distribution rates—the list goes on. Wine directors are now faced with the need to reconsider how they price their lists to offer value while maintaining enough sales volume to satisfy their respective business models. So, how have they adjusted their pricing models? We asked a number of top wine buyers in New York.
“Across the board at Four Horsemen, we almost always do a 3x markup, which is generally the standard. There are wines that are hyperallocated that we sell at market rate which is often higher—but I usually just send those wines to our storage because they’re too young to drink at that price. Our prices have definitely gone up. Around nine years ago, we had a lot of wines on our list in the $40 or $45 range. Winemakers are [now] selling their wine for more, often because they have to. And in the end, for us, a 3x markup is basically the lowest we can go to still keep a list we’re proud of and make a profit margin. Of course, we do our best to make sure we’re helping people choose bottles that feel within their price range. Any time someone sits down with our wine list, our team will ask what they’d like to drink, and how much they’d like to spend. We gauge how much someone is comfortable spending before we put a range of options in front of them, and I do think that’s important.”
—Justin Chearno, The Four Horsemen
“Currently, the markup on our wine list at Roscioli is 2.5x the cost we pay for the bottle. The markup at most restaurants is 3.5x, so we’re trying hard to keep things more approachable. Then again, there are two cases where I make exceptions: First, if the wine is highly rare and/or allocated and the average market price is substantially higher than the wholesale price (wines from Marie-Noëlle Ledru, for example). The second is if I’m trying to promote the wines because they’re delicious but more unknown and a little pricey (e.g., Cazé-Thibaut). In that case, I would mark the wines up to just 2x the wholesale price.”
—Kenneth Crum, Roscioli
“There truly is no general policy. One of my chief mandates for our two wine directors is ‘no Excel spreadsheet wine list,’ meaning: no taking a wine and multiplying it by 3x or 4x no matter what the wine is. We buy wines with the knowledge that they will fit into the program economically, not the other way around. We look at all markets (auction, retail, wholesale year-over-year) and attempt to find value in wine purchases. Then we compare those same markets to competitive wine lists in our micromarket. Whenever we can, we seek to offer the best price possible.
“The wines we make exceptions for in the general 3x to 4x markup arena fall into a few categories: specific vintages or iconic producers. Almost always, these exceptions result in our businesses making less money. If I find a wine that I think will look incredible on the list, we’ll eat more of the cost because we believe in the wine. When we consider shifts or changes in pricing over the last few years, the question to ask now is, Does this price reflect value in the overall market or not? Yes, we want to make money on our wine—and we do. But, more vitally, when we can offer something both exciting and affordable to our guests, we’ll take that leap, regardless of how much we make.”
—Chase Sinzer, Penny and Claud
“We look at the price of our average wine bottle sale. Everything below that amount, we price according to [cost of goods sold] (as a multiple of the at-cost price we pay to our distributor or importer) and everything above that becomes a matter of absolute dollar value. So for example, a bottle that costs $25 wholesale will end up on the list at $75. But a bottle that cost $150 may only be priced at $275. We use this pricing strategy for two reasons: Firstly, wine sales are one of the easier ways to try to increase revenue, particularly in a smaller restaurant like King. With wine, the absolute dollar amount we can make is much higher than any item we have on our menu. In order for the kitchen to make the same amount of gross profit, they would have to sell dozens of panisses versus just one bottle! And secondly, we want to encourage wine lovers to come to our restaurants. I grew up an avid vintage and antique magpie, and I love to leave little gems for people to find, particularly bottles that hold a special place in my heart.”
—Annie Shi, King and Jupiter
“I generally stick with the norm as far as markups go: 3x to 3.5x. If we’re looking at the last of a vintage of something, I’ll raise the price a bit higher. But as a rule of thumb, I try not to go above that 4x markup. If I see the same bottles of wine we sell for $10 more elsewhere when I’m out… I’ll go with beer or a cocktail. At bottom, I don’t want to make people feel like wine is a luxury they can’t afford. I want to make a profit, but I also want everyone to feel they can come to Ernesto’s and enjoy a bottle of wine without breaking the bank. In fact, what drew me to Spanish wine in the beginning was the price—it was often a bit lower, and I was rarely disappointed. I’m hoping to give that same experience back to my guests.”
—Daryl Coke, Ernesto’s
