The Puzzle of Wine Price in Restaurants

Abstract

There is large variation amongst food service operators in pricing wine, and many questions remain about how wine is priced and what objectives are used to determine wine price in restaurants. In this essay-style article, we examine the practices that the industry have adopted when pricing wine in restaurants. Beyond the basic rule of thumb -- applying proportionally smaller mark-up to higher-priced wines --, pricing can be driven by the market, customer or competition. The restaurant's characteristics as well as institutional and environmental factors can influence the price of wine at restaurants.