How are the markups on restaurant wine lists determined?

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Dear Dr. Vinny,

What and how are the markups on wines on restaurant wine lists determined? Is there a basic formula that most restaurants adhere to?

—Lara, Seattle

Dear Lara,

Most restaurants start by pricing a bottle on a wine list at about three times the wholesale price, or about twice the price of retail. So, a bottle of wine you’d pay $20 for at a wine shop will typically go for about $40 at a restaurant.

Of course, it varies. And I should mention that there are state laws and tax codes that make this formula more complicated in certain parts of the country. Some restaurants will increase or decrease their margins based on what’s selling to their customers. I’ve noticed that more expensive bottlings are generally where the “value” is—that is, the more expensive the wholesale bottle price, the lower the markup. Other restaurants charge a flat fee for a markup (for example, every bottle may just be listed at $15 above retail). The biggest markup, proportionally, is usually for wines by the glass.

—Dr. Vinny

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