Episode 225: What’s Really Going On with Restaurant Wine Pricing?

Wine Enthusiast Podcast

Wine professionals Michael Laudenslager and Peter Andrews join Ryan Grimm to discuss the rising costs of wine in restaurants. They explore h

Key takeaways

• Rising restaurant overheads—specifically rent, labor, and food costs—are forcing restaurants to use wine as a high-margin safety net.
• Michael Laudenslager suggests that moving from a 24-26% beverage cost target to 30-32% could allow for more exciting, accessible wine selections.

Main topics

• Restaurant wine pricing trends
• Post-COVID economic impacts

Notable quotes

$20 scares people. $19 doesn't.

Conclusion

While economic pressures are making dining out more expensive, the ind

Transcript preview

Speaker 2 (0:05) Hello and welcome to the Wine Enthusiast podcast, your servant of drinks culture and the people who drive it. I'm Ryan Grimm, magazine director here at Wine Enthusiast. Today we're talking about, you guessed it, wine. But specifically wine in restaurants. What makes a good wine list? Why it's becoming more and more expensive to drink wine at restaurants? And what's happening behind the scenes? Is it just me or more and more people getting completely priced out of buying a glass of wine at a restaurant? I had a lot of questions, so to help illuminate things, I'll be joined by two seasoned wine professionals. Michael Lodenschlager is one of Wine Enthusiast's Italian wine reviewers, covering wines from the sub-regions of Tuscany, Southern Italy, and Sardinia. He's also a Somali with many years of hospitality experience, currently the wine director at the Restaurant Peasant here in New York City. Also joining us is Peter Andrews, founder of Culture Wine Co., which is an importer, wholesaler, and e-com retailer focused on South African wines. Peter is also the co-creator of Hella Shenan, an annual wine festival in Berkeley that celebrates the many joys of Shenan Blanc. You can also look for Peter on our 2026 Rising Stars list from the October issue of Wine Enthusiast. Gentlemen, thank you so much for being here. So we are here to talk about wine in restaurants. Off the bat, I'll just say we love restaurants. We love drinking wine in restaurants. Wine Enthusiast in no way is trying to come after restaurants. But my first question is for you, Michael. Probably the first question that a lot of our listeners would have. What is going on with by-the-glass pricing? Why is wine in restaurants becoming so expensive? Speaker 3 (1:33) Oh, that's a good question, man. Being in New York City, I think people are just really trying to take advantage. This is Speaker 2 (1:40) probably the first part of the answer. People are really trying to take advantage of high pricing again. Speaker 3 (1:44) I think I'm so sick and tired of talking about COVID. You know what I mean? It's not so long now, but there are some ripple effects for sure that we're feeling. But we are feeling not just the city, but the world coming back to life in terms of Speaker 3 (2:02) not being so price conscious of things anymore, you know? New York, there's some ultra premium pricing on, on by the glass, man. And I personally hate it because I know the price of 90 % of the bottles that I'm picking the drink, you know what I mean? So right in my head, I'm already like costing things out. I'm like, damn, they're really, really bopping me over the head for this glass of burgundy. You know what I mean? Speaker 3 (2:29) But I think it all comes down to everyone being a slave to the formula of beverage cost. You know what I mean? And everyone wants their numbers to look good at the end of the day. And when they sit down with their accounting teams and restaurant teams, everybody wants to be like a percentage hero. And of course, yeah, you make money off these percentages. But at the end of the day, I think the other side is... more profitable in the long run because of, you know, repeat people, because they get excited over prices and, um, especially wine people. I think all three of us, when we see, uh, proper priced things, we get super excited about, you know, and then that's probably a little bit more fire behind that person to, to go back and revisit that wine list. Um, so I think what we need to see is a little bit, you know, fight against the, the, the, the. beverage cost number that everyone tries to go after, which is like 26%. Sometimes it's 24%, which is nuts. I think the 30 to 32 % number is a sweet spot where we could see a little bit more excitement happen. And you could even pour better wines by the glass, you Speaker 2 (3:41) know, at those numbers. Speaker 3 (3:43) But at the end of the day, I really think it's just people trying to take advantage of, you know, people's pockets and bopping them over the head. That's really the honest answer, man. You know, me and my friends, when we go out, we know what group we're looking at when we're going to that restaurant, you know, and sometimes it's just like, yeah, that's how they are. And that's the honest answer here at the restaurants that we run really doesn't happen. We're honest and we get excited about the wines we're pouring and not saying the other people don't, but we want people to drink really good wine. And then we look at the numbers. Of course, we keep things in mind and try to be smart about what we do. Yeah, but you got Speaker 2 (4:27) to Speaker 3 (4:28) stay Speaker 2 (4:28) open. Speaker 3 (4:28) Yeah, you got to be good business people. But at the end of the day, the best businesses are the people that come back and buy the product. And Speaker 2 (4:37) about the markup, do you feel like way back when it was 400, 500%, do you feel like that's kind of creeping up in bigger cities? Yeah, in bigger cities for sure, man. I mean, that's Speaker 3 (4:49) just where it is. And not to mention we get like the ultra premium wines or we get the best wines first type thing, you know. So some people do feel that they can market up a little bit because it is a little bit more exclusive to the city or the area or the restaurant. And because it's super exclusive and you might not see it somewhere else, it's almost like that little asterisk next to the glass. Where you're going to be like, well, you really can't get it anywhere else. So you're going Speaker 2 (5:18) to Speaker 3 (5:18) pay this price. And Speaker 2 (5:19) Peter, I guess same question to you. Like what on the importer side, what do you wish restaurants would be doing more of when it comes to pricing or selection? I guess other than, you know, buying more South African wine, of course. Speaker 1 (5:32) Yeah. I mean, I think to first to like kind of expand on Michael's point on the restaurant side too, is like rents have gone out of control and they, every time it leases up restaurants. are most likely going to move because the rent increases go out of control. Food costs are out of control. Labor costs are extremely high. And not that people don't deserve to be paid more, but restaurants run on incredibly thin margins. And those three things adding up make it extremely hard to run a restaurant. And so it makes sense that wine and alcohol in general, that's always been kind of like the safety net to allow you to make any extra margin to cover all of those. low margin categories, it makes sense that they need to be marked up so high. But I think we're kind of at this point now where consumers are saying enough is enough. I'm not paying this amount for wine anymore. I don't value it this much anymore. I don't understand why I should pay $20 or more for a glass. And so I'm going to go to a cocktail or a mocktail or God forbid, RTD at a restaurant. So like... I think we have to be realistic around the fact that if we don't meet consumers where they're at with better pricing, then they're not going to drink. And then the whole economic model breaks. So from the importer side, I have to look at that and say, how are people going to actually engage with these wines? How are restaurants going to even pay attention to it? And you have to offer them a price point where they're drinking. And I think I'm based in San Francisco. And what I see here is like, The $15 to $18 by the glass price point is really the sweet spot right now. And that's really high for most of the rest of the US. I guess that'd probably be even low for New York. But the more that I expand and go into other markets, I'm seeing that even $15 is kind of the peak for a lot of markets. So I'm in this really interesting catch-22 because my entire business model is trying to... I guess, premiumize South African wine and get them viewed as world-class quality that they are. And the more that you discount or position something as value, the more you lower the ceiling of its potential. So the reality is you need to give customers and consumers a good price point to actually jump in. But the other end of it is you don't want to diminish its ability to be viewed