Monday, June 28, 2010

Rant: Do You Mind Paying 10X The Cost?

Many of us get upset about wine prices at restaurants, which commonly can run 3-4 times the average retail cost. It seems even worse when we know the restaurant paid wholesale, meaning the markup is even higher. We feel cheated, ripped off, and don't understand why the prices are so high. It is especially galling when there are other restaurants which seem to do very well with a far more modest markup. Why can't all restaurants follow suit?

Yet there are items with an even higher markup than wine. But for unknown reasons, people don't seem to get as riled up, though they might be paying as much as 10 times the usual retail cost. And they should be very concerned, as this item has even less justification than wine for the markup. I am talking about spirits, hard alcohol like vodka, rum and gin.

Most spirits are sold by the shot or mixed into cocktails, and such drinks commonly cost $8-$20, and some even higher. The standard shot glass is 1.5 ounces, and there are about 25 ounces of alcohol in a standard 750ml bottle. You thus get roughly 17 shots from a single bottle, and if the restaurant charges $10 per shot, that bottle ends up costing the customer $170. That same bottle might retail for $15-$30, making a markup of 5-10 times.

That markup is far worse than wine, and almost seems criminal. So where is the outrage? Why do people complain about wine prices but ignore the huge markup on spirits? Wine at least has some justification for the added price, such as its short shelf life once opened. Most spirits can last quite a while once opened and won't die off in a few days. You don't have the storage issues with spirits that you do with wine. No need for temperature and humidity controlled cellars.

It seems that restaurants charge so much because people are still willing to pay the price. But why are consumers doing so? They would not go to a liquor store and pay 10 times the retail cost for a bottle of vodka. So why go to a restaurant and do that?

Restaurant owners, justify yourselves. Why do you have such a high markup on spirits?

Consumers, stand up and make your voice be heard. Let these restaurants know you won't tolerate this price gouging.


Sunday Cook said...

At the bars I visit, no, I don't mind one bit, reasons are several:

** I frequently have cocktails with obscure or expensive spirits in them

** I go to bars staffed with great bartenders - I am paying not just for the drink, but for the experience

** I probably never pay more than $12 for a high-end cocktail

I do think your math is a wee bit off tho - most "martini" glasses at many restaurants hold well over 5 ounces, one restaurant we go to serves their drinks in a TEN ounce glass. (As an aside, I'd say that is absolutely horrifying - not to mention that your drink is warm by the time you're 1/3 through).

If you order a dry vodka martini for instance (I never would, but some do), after dilution is taken into consideration, at a minimum, that 10 oz glass will hold 6 ounces plus of sprit. A Cosmo served in that glass, after juice is accounted for, will still be mostly booze.

1.5 ounces may be a shot, but it's not a drink. Even a drink of straight sprits served on the rocks will be a 3 ounce pour at least.

So while there is a markup, I don't think it's quite as high as you estimate, at least in my experience (and I'm quite the boozehound :-) ).

Doug Levy said...

I'm inclined to agree with Sunday Cook. I know that when I'm at a bar, I'm paying not just for the ingredients but also for the experience. If I am paying $12 for a cocktail, I expect high quality ingredients including fresh juices or garnishes served in proper glassware and maybe with a bowl of nuts or other nibbles - and a water glass that gets refilled. If I'm only served a drink, then you're right - it should be maybe $5 or $6. I'm lucky. In my neighborhood, we have both kinds of bars.

Richard Auffrey said...

You both raise some very valid points, and maybe my numbers are somewhat high. Yet I believe the original premise is still valid, that we pay a fair amount over retail for the cost of spirits, and few ever complain about it.

Most bars/retaurants seem to charge a single price for their martinis, whether it contains expensive ingredients of not. So some martinis are probably a better buy than others.

If you order something simple, like vodka on the rocks, the skill of the bartender really does not come much into play. Yet you still pay a premium.

Others do pay over $12 for cocktails. And high end spirits do cost more in your drink.

So much probably depends on exactly what one orders at these places, some drinks being a much better value than others.

Thanks to both of you for your comments.