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I know restaurants have to make money. I know they make much of it from wine and liquor sales.
I also know that people expect wine to cost more at a restaurant than at retail.
But this is ridiculous: A Sausalito, Calif., cafe was charging $6 a glass last weekend for a wine that’s widely known as Two-Buck Chuck.
Can anyone top that for sheer markup ambition?
For those who have been trekking in Nepal for five years, Two-Buck Chuck is officially known as Charles Shaw. This California wine brand got its nickname from its $2 retail price in Trader Joe’s stores in some states, and $3 per bottle in other states.
Let’s do the math: I’ll assume that the Two-Buck Chuck did not cost the Sausalito restaurant any less than $2. I don’t think the wine is even sold to restaurants through the distribution chain, so the restaurant probably bought it the same way you or I would, at Trader Joe’s.
So at $2 per bottle, divided by five 5-ounce glasses per bottle, the per-glass cost to the restaurant is $.40. Divide the $6 per glass customer price by this, and you realize the restaurant multiplied its cost by 15 times. Or you can say the markup is 93 percent of the per-glass price.
Compare this to the more typical restaurant by-the-glass approach. Take a nice $18-retail Sonoma Chardonnay. It would cost the restaurant about $9. By the bottle, it would be on the wine list at probably three to four times that, or $27-$36. By the glass, it might be as high as $9, the same as the wholesale price that the restaurant paid.
These numbers lead to a multiple of merely five times the restaurant’s cost for a glass of the Chardonnay. Five times is still way more than a restaurant marks up anything but its mineral water. I still can’t believe restaurants charge $9 a bottle for the same San Pellegrino that costs $1 at Costco.
Pricing Two-Buck Chuck at $6 a glass, however, makes the Pellegrino look cheap. At 15 times cost it is a breathtaking rip-off.
Who has seen a restaurant wine price comparable to this? And what do you consider a reasonable markup for wine?
Filed under: Restaurants and Food
11 Comments
11 Responses to “Restaurant Math:Two-Buck Chuck at $6 a Glass”
Please Wait
March 11th, 2008 at 1:22:23 AM
Borsao by the glass at $12 at Craft in LA.
With the bottle cost at approximately $4 for the restaurant, the Borsao is the same 15x mark-up as $6 for Two-Buck — but with slightly more respectable juice than something bought at Trader Joe’s.
It’s slightly more deceptive for customers, however, since I’m guessing anybody who orders the Borsao at a top notch restaurant wouldn’t know they’re paying double to retail bottle cost for just a 5oz pour (nor would they expect this at a place as esteemed as Craft), but everybody knows how much a bottle of Charles Shaw costs…
I guess even Craft has to worry about paying the rent.
March 11th, 2008 at 7:59:55 AM
Its called “greed”. And it is no different than what the Bordelais have done with their outrageously overpriced wines, that I can no longer afford to drink. But in the end its people who are either too stupid to realize they are being ripped off that allows the greedy to charge these excessive prices or in the case of Bordeaux wines, people with too much money who are willing and able to pay their pumped up prices.
March 11th, 2008 at 11:31:01 AM
I think it’s smart. They’re giving their customers what they want. If a customer is willing to pay the premium to drink Two Buck Chuck at a restuarant, the restaurant is at no fault.
March 12th, 2008 at 3:38:28 PM
Jim,
I certainly would not pay $6 for a glass of Two Buck, and (I could be wrong here) I doubt that those who buy the wine from Trader Joe’s would either. I’m guessing but I bet the wine list had it as the Award Winning Charles Shaw.
I’m almost embarrassed to mention this but I have tasted both the Shiraz and the Chardonnay, mainly because these wines have been known to wine Gold (I think even Double Gold) at certain wine shows and there is that desire to know why!
The most interesting experience was the Shiraz. I bought a bottle of the 2002 some years ago and it had ended up hidden away in the back of the wine cellar, and was found when I was cleaning out to make way for some new wines. Because it was 5 years old I figured we would open it, find it undrinkable, dispatch it to the drain, and open something more interesting. Wrong again. The wine was actually still quite fresh and drinkable. Was it great? Certainly not but for an outlay of $2 it was the best “cheap” wine I have cellared for that period of time. Did I race out and buy more? No, I’ll leave the wine for that little old lady I saw directing a Trader Joe’s carry-out guy, laden down with several cases, to her car.
Mike
March 12th, 2008 at 3:44:22 PM
Just to answer your question about marking-up wine prices in restaurants etc – a 2-3 times increase is acceptable to me. But I always find myself looking at the prices and comparing it with what I have seen the wine selling for and usually (not always) going for a wine that is a better value.
Mike
March 13th, 2008 at 2:21:06 PM
Aaargh! Thanks for putting a dark cloud over my sunny day, Jeff! I love restaurants featuring more and more wines BTG. However, when Charles Shaw becomes the affordable lunchtime pour at $6 and others are getting pushed up so that a nice glass that goes well with your meal is $16 and up, something is seriously out of whack. I hope the market teaches abusers of public trust a lesson and orders beer.
March 15th, 2008 at 9:40:28 PM
Last night my wife and I had a bad wine experience that had me tossing and turning all night. We paid $6.75 per glass of Four Sisters Sauvignon Blanc. Not that that was excessive, but it came in a 5 ounce pour in a glass filled 3/8 of an inch from the top. I think that is okay when I pay $4.00 for a glass of house red in a pizza place, but this restaurant should know better.
My point is this. You would never be served beer in a shot glass. No bartender would think of serving a Martini or a Manhattan in a mug. Why is proper wine presentation such rocket science to some restaurants? Yes, wine in your average restaurant a poor value. Sixty percent of the time, I don’t buy wine in a restaurant.
March 17th, 2008 at 6:44:17 AM
At the cheaper end of the wine market, a restaurant has to achieve a much higher markup (in terms of percentages) than at the higher end.
A restaurant needs a profit of (say) 10 dollars per bottle to cover its standing costs.
This might become as much as 15 or more if it sells by the glass to cover wastage, pilferage etc.
So a bottle that cost the restaurant 2 USD might sell for 12 by the bottle or 17 by the glass.
Divide that by your 5 glasses to the bottle and you have a price of 3.40 so that’s not very good value.
(Please remember that I’m using nominal figures here. I’m also not trying to justify 6 dollars for a glass of “Two Buck”. My figures also only cover costs. The actual profit per item needs careful calculation if the restaurant is to stay in business and would be in addition to the costs when calculating the final price.)
However, buy a glass of wine that cost the restaurant 20USD, and the value increases substantially.
As long as the Restaurateur is working on a cash mark-up and not a percentage gross profit, his costs are still the same and his profit need not increase substantially. (His only extra costs are the cost of keeping an expensive wine in stock: the cost of borrowing the money.)
So the price of a glass from our 20 dollar bottle becomes 7 dollars, only twice as much as the price from the 2 dollar bottle. Much better value.
(I tend to buy a decent bottle from the list, rather than a glass of house cheapo wine. That way I usually get better value and a much better drink.)
March 17th, 2008 at 6:46:28 AM
Sorry, I posted the comment number 7 then realised that I might be confused with Jim Gordon.
I’m not him!
April 8th, 2008 at 10:02:11 PM
le continental in Quebec city charges $15 for a glass of smoking loon syrah. I’ts $9.99 at my grocery store. They wanted $55 for a bottle.
July 24th, 2012 at 8:50:23 PM
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