Column: Arbor Vinous
Joel Goldberg
Feel like celebrating a special occasion with dinner out and a bottle of Veuve Clicquot Champagne?
If you decide to clink your flutes at Gratzi, get ready to pay $105 for the privilege. But walk around the corner to West End Grill and you can raise a toast with the identical bubbly – for just $70.
Maybe you prefer a rich California red, like Duckhorn’s 2006 Napa Valley Merlot. At Mediterrano, a bottle will add $77 to your dinner tab. But you’ll save a sawbuck if you pair it with Pacific Rim’s Asian cuisine, where it’s only $55.
These oddities popped up from a dig into Ann Arbor restaurants – specifically, which ones offer customers the best value for their wine dollar. After riffing through a stack of wine lists, here’s the bottom line: some places in town soak you for 50% higher markups than others.
Restaurants commonly sell wines for two to three times their retail price. If you’re watching your budget, such steep markups can encourage you to eat at home more frequently, or deter you from ordering wine when you do eat out.
Local wine historian Dan Longone put it bluntly. “My god, they’re charging $30 and it’s a $10 retail bottle… We generally won’t order it.”
Many consumers apparently agree. While wine sales remain strong through the recession, overall numbers hide some underlying trends: retail sales have surged while those in restaurants dipped. That fits the pattern that 60% of restaurants nationwide currently report decreased sales.
California wine writer Dan Berger, who judged at last month’s Michigan Wine Competition, suggested this spring that high wine markups, which can double the cost of a simple restaurant meal, are a prime culprit behind lagging restaurant sales.
“That has left many restaurants with a lot of empty chairs on midweek nights; some are light on weekend nights, too,” Berger wrote.
Berger also points out that restaurants don’t pay retail for their wine, but instead buy at the same wholesale prices that stores do – about 1/3 under retail. That translates into marked-up prices that can reach an astonishing four times what the restaurants paid for the wines.
But signs are emerging that this may be changing, at least elsewhere. Just a few days ago, Galveston, Texas, wine columnist Laura Elder wrote that restaurants in her area were “uncorking aggressively lower prices on their most expensive wines to get consumers pouring through the doors.”
Standard industry apologia points to the costs that restaurants incur for glasses, storage, and the service to open and pour the wine. But those costs can’t justify this level of pricing, which exceed the markups on the far more labor-intensive food portions of a meal.
Nor can the majority of restaurants (save a few, like The Earle) explain high markups by pointing at their long-term investments to buy and cellar wines. Today, most restaurants offer primarily current releases that they buy as needed from area wholesalers.
So how does Ann Arbor’s restaurant pricing stack up? To find out, during August, I wheedled or downloaded wine lists from nine local restaurants: Café Zola, Grange, Gratzi, Logan, Mediterrano, Pacific Rim, Paesano’s, Real Seafood, and West End Grill.
While some of the restaurants clearly offer more and better choices than others, we’ll save that discussion for another column. All but the pickiest wine drinkers should be able to order an enjoyable bottle at any of them.
But that’s not the point of the exercise. Where will you find the best values and where will you overpay?
To find out, I price-checked a half-dozen bottles from each of the lists against their current retail prices on the shelves at Plum Market, divvying up the selections as much as feasible among white, red and sparkling; foreign and domestic.
Then came the number-crunching – calculating the markups on the retail price for each wine and each restaurant.
(I also calculated each restaurant’s markups based on their estimated wholesale cost, assuming a retail markup at Plum of 30%. Since this is an estimate, I avoided using it for much analysis.)
Variations on individual wine markups were striking. They varied from as little as 6% (that Duckhorn Merlot) or as much as 400% (Cristalino Rosé Cava at Café Zola) above retail prices.
Differences between restaurants were equally striking, if less extreme, with markups ranging from 84% over retail at the lowest (Pacific Rim) to 184% above retail at the highest (Real Seafood).
At the lower markup restaurants, you frequently find wines for less than double their retail price, others at just slightly more. At the other extreme, markups on individual wines of three times retail are common.
Overall, the restaurants broke down cleanly into three distinct groups.
WALLET-FRIENDLY (Restaurant prices less than double retail price):
- Pacific Rim (184%)
- West End Grill (187%)
IN-BETWEEN (Restaurant prices 200% to 220% of retail price):
- Mediterrano (214%)
- Grange (218%)
- Logan (218%)
HIGH MARKUP (Restaurant prices over 250% of retail price):
- Paesano’s (259%)
- Café Zola (261%)
- Gratzi (273%)
- Real Seafood Company (284%)
(If you’re curious, here’s a list of the wines used in the survey and the spreadsheet with the numbers.)
In practical terms, how does this translate when you eat out?
On average, a bottle that retails for $20 will cost you $37 at Pacific Rim and $57 at Real Seafood. Your mileage will vary, of course, depending on the individual bottle you select.
Or flip that around. Let’s say you want to spend $35 for a bottle of wine with dinner. At Gratzi, you’ll typically be buying a bottle that retails around $13. West End Grill is more likely to offer you something you’d see in a store for $19.
Of course, with a few exceptions like Veuve Clicquot, listed at five of the nine restaurants, you won’t find many of the same wines at multiple places. So if you have a strong hankering to pair Italian food with a good selection of less-common Italian wines, you’ll probably still want to head to Gratzi or Paesano’s. Enjoy your wine and don’t worry about the extra dollars.
In no particular order, here’s a few more observations gleaned from the wine lists and price data:
- It’s a pleasure to report that Sex is widely available throughout Ann Arbor, at prices ranging from $27 to $32. That would be Leelanau-based Larry Mawby’s slightly sweet bubbly, produced under his M. Lawrence label.
- Many restaurants traditionally took outsize markups on Champagne and other sparkling wines, on the theory that people sought them out to celebrate special occasions and would pay a little extra for the privilege. Some Ann Arbor restaurants still subscribe to this theory, so caveat emptor if you hanker for bubbly.
- Some restaurants specialize in certain countries or types of wine to complement their cuisine or cater to the restaurateur’s proclivities:
-- Gratzi’s and Paesano’s lists are unsurprisingly Italianate.
- West End Grill tilts heavily toward the U.S.
- Pacific Rim offers numerous smaller and offbeat producers that might appeal to wine geeks.
- Logan offers the broadest list, with over 200 choices.
- Despite its locavore-oriented concept, only eight wines on Grange’s list come from Michigan. Half of them are Mawby bubblies.
- Real Seafood primarily stocks bottles under $50.
- On the higher end, Café Zola’s Reserve list offers a sizable selection between $100 and $250.
- Some restaurants set a minimum price for anything that appears on the list, regardless of how little they pay for them, in order to cover overhead and profit. If you’re price-sensitive, it’s a good idea to know this before you walk in the door.
- Café Zola plays this strategy ruthlessly, with a $34 minimum. They charge $35 for a bottle of sparkling Cristalino Rosé from Spain that Plum sells for $7. At an astounding 500% of retail, that’s the single most egregious markup in the survey.
- That leads to a related maxim: The lowest-priced wines on a list often represent the poorest values. Many savvy buyers figure that better values live just a few dollars above the opening price points.
- Second related maxim: Just because you’re not paying a lot of money doesn’t mean a wine represents good value. Real Seafood offers one of the lower-priced lists in the sample, yet topped the chart for markups.
- Best deal in the survey: That 2006 Duckhorn Merlot for $55 at Pacific Rim, just $3 over Plum Market’s retail. “They must have gotten a special deal on it,” observed Plum’s wine manager, Rod Johnson.
- Is it coincidence? The survey’s two highest-markup restaurants, Gratzi and Real Seafood, are owned by the same company, Main Street Ventures.
- West End Grill has some of the better prices across the board, but it’s of concern that many whites on their current list come from previous vintages. Even with good storage, the overwhelming majority of white wines are best on release or shortly after, and don’t benefit from aging.
Now the main thing: Wine is meant to be enjoyed, not nitpicked to death. So once you’re done with the price comparisons, don’t forget to treat yourself to a good glass of wine!
About the author: Joel Goldberg, an Ann Arbor area resident, edits the MichWine website and tweets @MichWine. His Arbor Vinous column for The Chronicle is published on the first Saturday of the month.
Another great article Joel…great info. I am curious how the Earle may stack up here. I have always thought that Steve, in addition to his great selection and considerable knowledge, has always maintained a fair markup.
I remember being in Nashville some years ago, and despite having someone from a major manufacturer buying us dinner, I couldn’t bring myself to order any wine. The least expensive offering on the list was a Cote du Rhone that I purchased regularily at home for 7-8 bucks at the time. It was $59.00!!! A Chianti I knew at about $12 was in the $80′s!!! I ordered a martini….
Great article! You eloquently explain why I seldom order wine at a restaurant. I would rather take the $50 and buy a $50 bottle of wine at the wine shop to enjoy at home, than to spend $50 on a $12 bottle at the restaurant.
I’d like to hear more about the idea of “house wines” in Ann Arbor. When we lived elsewhere, one could often have a glass or two of the house red or white at prices not too much above a beer. If one is not purchasing the wine as an oenophile but rather as a pleasant beverage to enjoy with the food, this can be a good alternative. I’ve noticed that here some of the bottled offerings are also available by the glass. The last time I tried that, the wine tasted as though it had been stored in the open bottle for a while. Any thoughts?
Viviennes point here is a good one. Wine by the glass can be a crapshoot. Some places will stick the cork back in with no attempt at vac u vin or any thing and still be selling that bottle a week later. Some retailer education may be in order.
In my travels I aften sit at the bar when I’m on the road alone. I will ask the bartender what he or she has opened since strting the shift….
Very well researched and thought out article! I now have to wonder about the mark up of my favorite hoppy beverage!! :)
Jay, The Earle (along with Eve, Melange and Vinology) aren’t in this column because I’d written about their wine bars several months back.
But they have Ann Arbor’s largest wine list by a long shot; I did a longer article on them for MichWine. Without putting their prices through the same spreadsheet as the others, my impression is that they tend toward the kinder end of the spectrum.
This is really useful information! Thanks.
Another item of information that might be interesting in the comparison is if these restaurants have a corkage fee that applies if you bring your own bottle. (I think this is legal for a restaurant with a license in MI). That would give a hint about the cost of washing glasses or whatever.
Thats a great point, Vivienne. Sometimes you just want a simple quaffer to enjoy with your food.
You can still find “house wine” lots of places; they tend to be perfectly drinkable commercial products that restaurants can sell at low prices and high markups.
But these days more and more places are moving away from that to offer wider selections of wines by the glass. As you note, that unfortunately makes it more likely you’ll run into bottles that have been open way too long (as the Vinous Posse did at Melange when we crawled wine bars for the Chronicle.)
If you’re going to order by the glass, your best bet is to do it at busy places with high wine turnover, or those that use some kind of nitrogen preservation system to keep their open bottles from spoiling.
Remember, too, that just because you order a glass, rather than a bottle, you don’t have to put up with defective wine. Over the years I’ve kicked back many an oxidized glass and politely asked them to pour another one from a new bottle.
M, Unfortunately, BYO isn’t legal in Michigan, whether or not the restaurant has a license — although there’s a little-known loophole for those in hotels. We just did a a MichWine piece about this with details about the laws and loopholes.
For the record, since I comment here at the Chronicle a lot, I am not that Rod Johnson, I’m the other one. Thanks to him, I’ve been getting phone calls asking for wine advice since 1973!
A great article! I’ll be forwarding it widely.
It proves again that Pacific Rim is one of the gems of Ann Arbor and that Zola and those big Main Street restos are overpriced and dubious all down the line. Pacific Rim’s food is also better than Real Seafood, Gratzi, or Zola where my family has had any number of bad meals (rotten olives, etc). Whenever family visits from out of town they always comment on the extreme quality-price distortion of A2′s middling “nice” restaurants. Too bad Knight’s wasn’t included: our fave place to entertain.
Restaurant wine staff are often surprised when I say “no problem” to a $20-25 corkage fee (which is probably designed to discourage the BYOB patron … I’m of course happier if it’s $10!). At first glance, it seems prohibitive, but once you do the simple math, as you did, you’re paying a $20 or higher premium on EVERYTHING in the $15-20 and higher retail price range. So if I think I might be wanting wine in that range or better, I may as well pull an ’89 Pegau or ’91 Silverado from the cellar and give the restaurant their $20 or $25 that they would have made if I ordered that young Beringer Knights Valley Cab.
Thanks for clearing that up, Rod. Any wine recommendations for our Labor Day barbecue?
Great article Joel. You have taken the raw data and really turned it into something palatable and entertaining. You are to be commended for such a valiant effort. Looks like you have confirmed what many felt all along.
Not so great article for unemployed people.
Years ago, the opposite was true. At the Earle, a bottle of Bonny Dune Le Cigare Volant was about $5 less than retail. I think Steve had it on the wine list for about $19.
Joel:
Great reporting! High-markup restaurants should be exposed. Also, keep in mind that some restaurants buy “closeout” and “programmed” wines at deeply discounted prices to them, and almost never pass along the discounts to consumers.
Dan Berger
Excellent research, and useful to boot! Great job Joel.
Hey Anon, why are you reading this (and complaining) if you are unemployed? Wahhh!
Joel, Psst! I think you have a typo in the “Wallet-Friendly” group. 184% doesn’t jive with the 84% cited above.
Keep up your insightful and helpful work!
Joel–ha.
Clay, thanks for the complement. But I don’t agree that Michigan’s unemployed shouldn’t be reading an article like this, or perceiving and commenting on it through the lens of their situation. If anything, Anon’s comment reminds should us that not everyone, even in Ann Arbor, has the luxury to fret over whether they’re overpaying a few dollars for a bottle of wine when they eat out.
The wines at Pacific Rim sell for 84% OVER retail, which means they sell for 184% OF the retail price. Same meaning, but sorry if the phrasing creates some confusion.
Great column, Joel. The wine markups at many of the big-players in the A2 restaurant scene have always, I my humble opinion, been brutally cynical and obscenely unjustified by the selections involved, wine list accuracy [vintages, subregions, etc.], and the competency/training/ability-to-explicate of the staffs involved.
Keep up the good work. Now if only some of our zombielike reviewers would apply the same approach, we might actually equip diners with useful, applicable information.
Peter di Lorenzi
good article, useful info. AA Chronicle needs some food articles, some restaurant coverage, and poof! you’ll be perfect!
Are you all sure it is illegal to bring in your own bottle? I know of one restaurant in town that allows it openly, (for both beer and wine) and does not even charge a corkage fee. They do not have a liquor license. Maybe that is the key? (better not mention their name until the legality is clarified.)
HJG, it’s definitely illegal for unlicensed restaurants to let you BYO — here’s a release about it from the Michigan Liquor Control Commission.
But just because it’s illegal doesn’t mean that some restaurants aren’t doing it every day… so better keep that name to yourself!
First of all, great column.
Second of all, I’m not a lawyer but this BYO argument has been circulating for a long time. The LCC has absolutely no jurisdiction here, and they admit it in their press release. They clearly say: “we can’t do anything about it, contact your local cops.”
So exactly what law are you breaking and what can your local cops do about it? If the restaurant isn’t charging you any money for: glasses, mixers, cover charge, corkage fee, etc., but rather just lets you bring in a bottle of your own wine, I am still trying to figure out, by carefully reading this press release, exactly what law you’re breaking. It eludes me.
From time to time, over the years, the police and the sheriff have been known–usually as a result of citizen complaints–to let BYO-friendly restaurant owners know that they’re being watched. No restaurant owner wants to be on the wrong side of the cops. Cops will also warn them that they’re leaving themselves open to lawsuits if anyone gets drunk and hurts themselves or others.
Okay, I’m off to the Pacific Rim for a glass of wine. (Honest! I am!)
Sally, I’m no lawyer either — nor do I have any desire to justify anti-consumer wine laws.
But here’s what the LCC says: BYO at unlicensed restaurants is illegal, but we’re not the guys who enforce it. We’re only empowered to enforce beverage laws at the licensed places we regulate.
The law in question is MCL 436.1913; see the link in my previous reply. It specifically mentions “the sale of food” for “consideration” as a prohibited activity in connection with allowing BYO — along with glasses, mixers, and the like. That pretty much covers most restaurants.
What can the local cops do? Arrest those who break the statute, as with any other law.
Laws like this, both anti-consumer and decades behind most other large industrial states, make me no happier than they do you. And as HJG notes, some restaurants regularly choose to ignore them.
Well that explains it! The “for consideration” phrase made absolutely no sense to me at all, so I just ignored everything that came after it.
The Duckhorn mystery was explained to me last night at Pacific Rim. Duckhorn is aggressively marketing their product to restaurants, selling it at huge discounts.