A Second Look At Petruce et al: The State Of The Markup

My review of the fantastic Petruce et al came out last week, and it kicked off a small but welcome debate. The question: Is the restaurant’s wine “pricey”—and what, exactly, does “pricey” mean?




Let’s start with the second part of the question, which I’d actually tried to answer in my review. “Wine is pricey at triple retail,” I wrote, “but there’s value in [sommelier Tim] Kweeder’s offbeat three- and five-ounce pours, which aren’t marked up any further.”

Commenter JM objected to my characterization—marshaling actual evidence (a rare and exemplary addition to any online comments thread). He provided the Pennsylvania retail prices, as well as Petruce’s list prices, for the restaurant’s white wines. The markups ranged from 2.19x to 3x.

“Hmmm, triple retail?” he asked. “I don’t think so.” (JM also disclosed that he sells wine in Pennsylvania, including to Petruce—a useful bit of information that may have helped set the civil tone that reigned over subsequent comments.)

After reading JM’s remarks, I looked at Petruce’s wine list and discovered two things: 1) The current red and rosé bottles follow the same pattern JM noted (with markups averaging about 2.6x), and 2) Tim Kweeder’s wine list has changed a ton in the weeks since I ate my review meals. Which is terrific—a sign of an enthusiastic sommelier.

At any rate, to JM’s question, “Did you do the math even?” the answer is that, indeed, I did. I calculated the markups for about 8 or 10 bottles—which was not the whole list, but a decent sample of it—and the results were mostly around triple retail. Unfortunately, I no longer have the paper copy of that list, so I can’t go back and check my work. (Although I expect that Philly Mag’s excellent fact-checker did it at the time.) Whatever the case, clearly there are two possibilities: my math was skewed by an unwitting selection of the most-marked-up bottles, or Kweeder has brought his prices down a little bit. If the former, I apologize. If the latter, I applaud.

But that’s not where the discussion ends, nor should it.

For one thing, these markup factors don’t include gratuity, which makes a big difference. With a 20 percent tip, a 2.19x markup becomes 2.63x, and a 3x markup rockets to 3.6x.

JM’s tone suggests that he considers these markups fair. Yet the very next commenter opines, “If you pay those prices you should punch yourself in the throat afterwards.” Then commenter Mick complicates the discussion by asking, “Why do people gladly pay 3x+ for beer or liquor, but when it is wine, you feel ripped off?”

I like that question. And though I definitely don’t count myself as one who “gladly” pays 3x+ markup for anything, here’s my own answer: I get markups on beer, especially draft beer. Beer requires more space, on a per-drink basis, than wine or liquor, and it also entails a higher refrigeration cost. Space is costly, especially in Center City. Draft beer carries additional costs: like cleaning and maintaining the tap system, and managing the special delivery and return of kegs.

Liquor is on the other end of the spectrum: it’s maximally space efficient, doesn’t require refrigeration—and for the most part, doesn’t go bad once you’ve opened a bottle. For these reasons, paying hefty mark-ups on straight liquor seems like the worst rip-off around. (Newfangled whiskey bars, I’m looking straight at you.)

Liquor in cocktails, however, deserves an exception—although just how big of one depends on the cocktails. All cocktails require at least some effort, if only to measure and mix them. But the city’s best cocktail programs involve even more effort—homemade bitters, infused and/or barrel-aged spirits, that sort of thing. This labor, like all labor, merits fair payment.

Which brings us to wine. With wine, all the labor’s already in the bottle, so that’s no justification for a markup. There is some expertise involved in selecting a list, on the other hand, so that’s added value. And wine does need climate control, and will go bad after you open it, which explains the typical premium for ordering it by the glass (and my pleasure that Kweeder avoids charging one at Petruce).

So, what’s a fair wine markup? The more I’ve thought about it, the more convinced I have become of two things.

Number one, every answer is arbitrary. I’ve always considered double retail to be reasonable—because that’s what my dad thought. For all I know, JM’s dad pegged it at 2.5x—and his mother was fine with paying 3x. Inherited assumptions play a large role in our expectations, as in every facet of life and culture.

But number two, multiplying a wine’s retail price by some factor is not the only way to do things. Some restaurants charge a flat per-bottle fee, for instance, which has always made more intuitive sense to me.

And do you know what makes more sense? Not relying on wine, or alcohol in general, to generate the lion’s share of your profits. Because why should a restaurant sell a scallop appetizer for twice the cost of its ingredients—laboriously transformed into a delicious dish by who knows how many prep cooks and sous chefs—but charge three times the cost of a wine bottle (or $41 more than retail on the least-marked-up bottle JM noted on Petruce’s list) for the service of storing and opening it?

I can think of answers--ranging from the high cost of liquor licenses in Philadelphia to the Puritanical view of alcohol dating back colonial America--but none of them prevent a local restaurateur from innovating in the wine-markup department. In the meantime, I’m going to try to find space in my reviews to note average wine markups as a matter of course, right along with entrée prices. That way customers will know what to expect--and perhaps restaurateurs will be motivated to compete on price for diners looking to get the most bang for their drinking buck.

Petruce et al [Philly mag review]

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  • Mark DeSouza

    This second last paragraph in this excellent discussion reminded me of a question I have always had – do places with a liquor license generally charge less for food that those that are BYOB and make no money from alcohol?

  • Pizza Without Cheese

    One question for Trey Popp, which is the right wine to consume with cheese from Thailand please? Thank you.

  • New York, now Philly

    Generally, the money from alcohol sales helps to offset other costs of the meal. It allows for lower prices for the food and can help to allow chefs more freedom in the ingredients they can use. It also helps to support the business as a whole, by offering better pay and benefits to the hardworking cooks and help to improve the overall quality of the food.

    A liquor license, if used well, can serve to enhance a customer’s experience. A well-crafted wine list can enhance the food the chef is serving and knowledge from a passionate, well-trained FOH staff can help guests pair well with the food. While the sales of alcohol definitely help the bottom line, there are many added costs as well that need to be considered – storage, management of the list, hiring/training of talented staff, loss from a variety of factors.

  • Dan

    The problem is that in order to get the same kind of mark-ups restauranteurs get in new york and other places, Philadelphia restaurants need to jack the prices beyond what anyone in the United States is charging for the same product. While this is bad for consumers, it makes the PLCB more profitable because restaurants have to pay close to retail. The PLCB’s revenue pays unionized salaries and the profits are transferred to state coffers. The added spread is really just an added restaurant/liquor tax.

    As an avid and educated restaurant goer, I guess I don’t have a big problem with this. I tend not to go to the Starr and Garces’ places where the discrepancy appears to be the greatest and I am generally able to spot the better priced wines.

    Going to a restaurant is a luxury and should be taxed accordingly, getting revenue for our schools and infrastructure is a necessity.

  • Jason Malumed

    JM here. I just got back from a long day of punching myself in the throat and saw this article.

    First, I appreciate the response. I hope my initial comment did not come off as incendiary, as that certainly wasn’t my goal. Rather, I was just looking for some accountability on what might have seemed like a small comment on wine out of an otherwise fantastic review. Obviously I am biased in my opinion since I sell wine in Philly and want to see all of the restaurants I sell to do well (especially Petruce since I consider Kweeder not only an account but a friend). I guess I was just surprised to see one of the crusaders for introducing interesting and fairly-priced wines to the Philly dining scene get called out for his high wine pricing. Tim is one of only a handful of people in Philly brave enough to take it on the chin and go under the 3x markup barrier on many of his wines, so I’m glad that error was cleared up.

    Moving on to this article, lot’s of worthwhile points here, and I thank you for creating a dialogue in this city about something other than beer for once! First, I don’t know if it is fair to count gratuity into the final markup on a bottle of wine. If you are being served a bottle of wine in a restaurant and presumably are not a UPenn student during Walnut Walk, you are going to add some form of gratuity on top of it no matter what (same goes for bottled beer, draft beer, liquor, and cocktails). Sorry if I am giving away any secrets of the trade here, but generally wine on the bottle list is priced approximately at 3x what the restaurant paid for that bottle (and for by the glass wine, you are paying that same bottle cost per glass). I don’t think a restaurant has ever calculated what the hypothetical additional gratuity would be and factored that in to their markup formula. But maybe (hopefully?) I am wrong.

    As for the question “Why do people gladly pay 3x+”, well, I guess I don’t know. You are right in saying it is totally arbitrary. I guess I have grown accustomed to happily paying 3x for wine (or beer or liquor) when out at a restaurant since it is part of my enjoyment of the experience of a restaurant as a whole. As Joe Dirt once said, “It’s a business, it ain’t UNICEF, OK?”. I will say that if you “considered double retail to be reasonable,” I challenge you to name one restaurant in this country that averages 2x retail on bottles of wine (and if you can even find one, it is certainly an exception, not the rule). I’d also refer you (and everyone) to this article – http://drinks.seriouseats.com/2014/04/sommelier-tips-order-wine-by-glass-or-bottle-best-value.html. In states that have actual wholesale pricing on wine, restaurants are happy to disclose that they are making a 4x markup in some cases! So, even though you might be paying a higher final price on that bottle in PA, you might actually be getting a better “deal” as the restaurant is making less of a markup in order to try and be competitive. But, I’m sure that comment will open up a whole other can of worms on the PLCB and their treatment of restaurants, and I am already exhausted from talking about that so much, so I’ll leave it at that…

    • John

      Northern California restaurants are replete with wine lists that average no more than 2X retail — those with higher markups (e.g., The French Laundry) appear to be the exception rather than the rule. And I don’t expect it has to do with having a wholesale price advantage from a proximity to the wine country. Many European countries (think Italy, some parts of Spain) have very gentle markups — not sure why, but may be to better encourage the enjoyment of wine with the meal.

      • Jason Malumed

        I’m not talking about 2x retail markup per se, it just happens to be that “retail” is what restaurants in PA pay for their wine. I am saying that you are going to be hard-pressed to find any restaurant with a markup on their bottled wine that is less than 3x the price they paid. That might make the wine come out at less than 2x retail price in state with true wholesale pricing, but the markup (3x wholesale price) still remains. Again, keep in mind the price that restaurants pay for wine in PA is essentially the same as retail.

        • Mike Oneill

          So the “best” Cote De Rhone pichet @ Good King that costs $30 to the consumer is a $10 bottle?

          • Jason Malumed

            I don’t know. What CdR are they using? If you let me know I (or anyone) can look up the SLO price that Good King paid for it using the website below, and then determine the markup from there. I also don’t know how much wine is in their pichet pours, sorry. Here is the link to the PLCB product search:
            http://www.lcbapps.lcb.state.pa.us/webapp/Product_Management/psi_ProductDefault_inter.asp

          • Mike Oneill

            I doubt it’s a $10 bottle. Pichet is full 750 ml. I’ve also had bottles at Vedge and Estia for $45-50. I can’t imagine those are 3 x the markup. Had a $52 Sancerre at another place recently…you’re telling me they only paid $17-18 for it? I find that hard to believe. In those cases, I’d have to think it’s a 2x markup.

          • Mike Oneill

            I’m not questioning these individual places. These seem like normal 2x markups to me. I’m more surprised that people swear the typical markup in Philly is 3x. This is an important conversation given the cost of a liquor license and the # of BYOs to choose from.

          • tjt

            just use the search tool instead of giving vague claims about wines you don’t know the details of. There are more than 25 Sancerres currently available for <$20 per bottle SLO.

          • Jason Malumed

            Vedge, yes. I know those bottles do not hit 3x. They are another one who regularly go below 3x markup in order to introduce consumers to new and interesting wines they stand behind. Estia, I’m not so sure about. Again, I encourage you to actually look up the numbers instead of just going on a hunch. You might be surprised in some cases…

    • New York, now Philly

      Most higher quality restaurants should be running between 25-35% food costs and those margins become precious when it is a BYOB restaurant. There’s also an inverse relationship between BOH labor and food cost – the higher your labor cost, the lower your food cost % should be.

    • Brandon Thomas

      Jason,
      I was going to comment on this article but you hit most of the points I was going to make.

      First, draft beer has one of the highest markups compared to other alcoholic beverages. For example, Yards PPA sold for $138 (last year) for 1/2 keg. On average you get 124 16oz glasses per keg which comes to $1.11 per glass. That beer sells for $5-$6/glass dependent on restaurant.

      And you are correct, beer distributors deliver and pick up their kegs. The restaurant assumes no financial responsibility minus a fully refundable deposit. Beer glasses are MUCH more inexpensive and are more thicker and durable (and a lot of the time come free from vendors). Amada’s wine glasses (where I was the wine buyer) cost almost $5 per and multiple ones would break nightly due to their delicacy. Most kegs are stored in basement walk-ins on the floor where nothing else is allowed to be stored due to health codes.

      One thing that is less talked about, or maybe less known, is that when a smart wine director puts together a list, he or she is not looking at the cost individually but as a whole list. Yes I’ve bought wine for $9 per bottle and sold it for $10 glass. Why? The wine over delivered for that price. Since my cost was so good on that wine it allowed me to pour a $26 per bottle wine for $16 a glass. Sparkling wines tend to warrant a higher cost as well for spillage. Once a bottle is opened to pour a glass, it needs to be sold. Preservation system or not, carbonation won’t stay after opening the wine a second time.

      It looks like Petruce tends to charge $2-$2.50 cheaper by the glass than they paid for the bottle. Their wine list is expensive because they buy expensive wine to pour by the glass! A known client of mine, part of a large group, up-charges 4-6x. Petruce is trying to do it right, but while us in the business can see that, normal guest perception may not be able to.

  • Thephillywineguy

    So tired of this discussion. The Trey Popps and Craig Labans of the world don’t want make people to make money. I’ve been in the biz for twenty years. Currently a captain and somm at a well known establishment that has been under fire for its pricing policies. The bottom line is this… Everything in a restaurant is marked up – the food, the drinks, the valet parking, the coffee. Everything. Period. The money you spend on a glass of wine is not just going towards paying for the bottle. It’s going towards any one of the thousand little expenses that are the cost of running a successful restaurant. It’s paying for the fine stemware you drink from. It’s paying for the electricity that powers the cooler that keeps the wine at the perfect temperature. It’s paying for the hourly wages of all the employees. It’s helping offset the price of having a liquor license to begin with (which is not cheap I assure you). Any restaurant that is not marking up wine at least 2-3x cost is over charging for something else. Guaranteed. If Mr Popp has some special insight into the economics of running a successful business he should write a book and grace us all with his intellect. Stop bashing honest, hardworking people that are just trying to make a living.

    • Jason Malumed

      (Posting this here because I want to make sure people see it)

      All,

      This has been fun, and I appreciate all the good comments so far. I hope this has shed light on some important issues PA restaurants have to deal with in order to have interesting and profitable wine programs. But, I want to get back to the real point at hand here:

      Trey Popp screwed up. He reported incorrect information about a business he was critiquing. Now, that information is out in the world online and will soon hit peoples’ mailboxes all around the Philadelphia area. And we still have not seen an apology (other than him blaming his fact-checkers) or redaction on his part for reporting this incorrect information. All I am saying is that I would like some accountability on his part. It would be a shame if this incorrect information negatively impacted consumers’ perceptions of Petruce.

  • Chuck Schwinger

    food is typically 3x mark-up. sometimes more.

  • http://www.petrucephilly.com TKweeder

    talking aboot bizarre markups…..Diner en Blanc? one pays to bring their own food, etc. and eat somewhere. brilliant biz plan! people eat it with a spoon

  • Mike Oneill

    As a consumer, am I paying for the tax the state charges the restaurant, PLUS the tax on my individual order of wine (glass or bottle)?

    • GC

      The restaurant pay the tax when it buys the wine/liquor. Then you pay it when you buy it from the restaurant, then the restaurant pays what you paid back to the state. So essentially the state is collecting 20% of the sale of every drink and bottle of wine sold in any bar and restaurant in the great commonwealth of PA. Double taxation. Both the restaurant and consumer are taxed.

      • Mike Oneill

        Ok, we need to stop this.

        • tjt

          LOL. Why? that’s normal (and it’s not 20%. considering the markup, it’s more like 12.5-15%).

          • Jason Malumed

            Definitely not normal. I can only speak for the other markets I have access to (NY and NJ) but when I sell a case of wine to a retail store in NJ, they certainly are not paying sales tax when they buy goods from the distributor. Sales tax is only assessed when the end consumer makes the purchase. In PA, sales tax is assessed twice. Still trying to figure out why…

          • tjt

            perhaps it’s not called “sales tax” but they are taxed. the idea that direct taxation is the only form of taxation that impacts a price is mistaken. Perhaps PA’s system is unique in how that occurs, but we aren’t being double taxed in a particularly novel way.

            Distributors in other states get taxed for all sales. They pass that tax to their customers (restaurants). Those restaurants pass that tax to their customers (patrons). Not much is different, just the name of the tax.

          • David McDuff

            As much as I’ve been trying not to chime in, I have to back up JM in this instance. Distributors in other states do indeed get taxed for all sales and do indeed pass those taxes/costs of doing business onto their customers. The PLCB does the same thing via various embedded taxes, the Johnstown Relief tax most notorious among them.

            Where PA does indeed “double tax in a particularly novel way” is with sales tax. What one must understand here is that, when it comes down to it, there is no such thing as wholesale pricing for restaurateurs in Pennsylvania. The PLCB buys at wholesale from the various distributors that sell in PA and they then sell to restaurants at retail, less a modest (10%) “wholesale” discount. This is equal to or less than the average mixed case discount offered by retailers in most open market states. After giving the PA restaurateur a 10% off retail discount, the PLCB then adds sales tax (8% in Philadelphia, 6% in most other parts of the state) to the price that the PA restaurateur pays for their wine.

            The restaurateur builds this sales tax — on top of all of the other embedded, less visible taxes included in the “wholesale” price of the wine — into the “all in” cost that they use to determine the price at which they will sell any given bottle or glass of wine.

            When the restaurateur sells said bottle or glass of wine, the next consumers in line — namely we self throat punching diners — pay sales tax again, often with a luxury tax add-on (10% in Philadelphia). So, the Commonwealth of PA is indeed double dipping on sales tax — in addition to and aside from other embedded taxes — with the sale of every bottle/glass of wine or spirits in restaurants.

          • tjt

            i guess i’m arguing that this is all a distinction without difference until someone shows the numbers. Yes, PA is unique in calling it “sales tax” twice, but the more important question (well, debateably “important”) is whether or not the total tax burden before the wine gets to the consumer is different in PA than in other states and, secondly, whether or not that’s due to the double-dip “sales tax.”

          • Jason Malumed

            The double-dip sales tax definitely plays a role. But here is the state’s markup formula for SLO (wholesale) wines:

            Let’s say I have a wine that is $12 a bottle. The state takes that number and adds a 30% markup. Now it’s $15.60. Then they add $1.50 per bottle handling fee. Now it’s $17.10. Then they add in the additional 18% Johnstown Flood Tax/Emergency Tax (whatever it is called now). Now it is $20.17. Then, they take that number and round up so it ends in $0.09 (just so it looks good). Now it’s $20.19. From there, the state adds in the shipping fee (up to $3 per bottle). Now it’s $23.19 (I should note that the state does not retain this shipping fee, it is paid back to the vendor). Now, if a restaurant wants to buy this bottle of wine, they get a 10% discount off of the price, not including the shipping fee ($23.19 – $3 = $20.19*0.9 = $18.17), then the 8% sales tax is added back ($18.17*1.08 = $19.63). From there, the $3 shipping is added back, so the restaurant is paying $22.63 on that bottle of wine all said and done.

            Just to keep track so far, the state has made $19.63-$12 = $7.63 on this bottle so far (or 63.58%). Please also note, the employees of the PLCB have touched this bottle for maybe a total of 2 minutes since it has been received at the store. Generally, it remains in inventory for 1-2 days before the licensee picks it up (and a maximum of 10 days before the PLCB cancels the order and sends it back). All of that money ($7.63 or 63.58%) is “tax revenue” so far.

            Now, the restaurant brings that wine back to the restaurant and puts it on the list for (slightly less than) 3x markup :-) ($22.63*3 ~= $67). Now, a diner buys that bottle (in Philadelphia) and again pays sales tax plus luxury tax for a total of an additional 10% added on ($67*1.10 = $73.70). And that is how a $12 bottle of wine becomes $74 in PA (not counting gratuity).

            A final recap: throughout this process the PLCB and the city/state has made $7.63+$6.70 = $14.33 off of this $12 bottle of wine (or ~119%).

            I’m not sure, but I think that total tax burden is a wee bit different than in other states…

          • tjt

            Thank you. That was very helpful (and disheartening as a consumer!). I suspect that is very different than other states and, note how little of that is due to the double-dip sales tax (the additional sales tax is roughly 10% of the total tax burden). Complaining about the sales tax burden is misguided because the total tax burden is absurd, no matter what we call each tax.

            There may be some minor critiques from someone who disagrees (should the 30% markup that any distributor would charge really be considered a “tax?”), but that’s not really important, imo. It’d be great if someone with experience in other states could speak to how much a bottle gets taxed elsewhere for that comparison.

          • David Fields

            Trey and others: It’s David Fields. I think I am in a good position to weigh in here as I have been a restaurant reviewer (at Philadelphia Magazine, no less), a wine buyer at three Philadelphia restaurants, as well as an avid eater and wine drinker around Philadelphia. I suggest that we all meet: Jason, Kweeder, Wildy, McDuff, and Trey Popp (yes we know what you look like) and we can all share some info about what is really occurring and why at restaurants. I have read so much misinformation from many of the commenters that it would be good to set the record straight on this important topic. And it would be fun to share some good wine (let’s go to a BYOB) and perhaps Trey could do a column from the info and opinions gleaned. I think it would be very informative for the magazine’s readership. I’m available pretty much any night but Tuesdays. Trey?

          • Benjy Satlow

            This is all beside the point. Justin, Steve, et al (pun intended) your comments are well researched and elucidating, and thank you for them, I’ve worked in Philadelphia restaurants for over a decade and just received a crash course in wine pricing thanks to you. But the truth is we wouldn’t be having this conversation if this was a review of any, and I mean ANY, other type of business. A restaurant is a business like any other, one that earns money by selling product at a profit. Nobody ever complains about the markup on a plant at a nursery or a pair of pants at a clothing store; we either do or do not buy these things and get on with our day. Restaurants are unique in suffering from a peculiar glitch in the human condition, namely that people, like any other animal, feel extremely vulnerable while eating and are therefore predisposed to feel slighted at restaurants. This is why some people see the table they are seated at as an opening bid in a negotiation and others feel it is appropriate to comment on their server’s facial expression. These are things that no doctor, accountant, or bus driver has to contend with. Yet those of us who are employed in restaurants deal with them each and every day. And we do so with an accepting smile and maximum accommodation. A restaurant, like your neighborhood hardware store, may mark up any product they want however much the market will bear. In the case of wine, if the product being marked up is familiar and readily available, the market will not in fact bear it.
            The reason Mr. Popp’s comments on wine markups are so galling, aside from his departure from basic tenets of journalistic integrity, is that he found the decidedly wrong bone to pick in the morass that is restaurant profit management. This is a business in which the vast majority of full time employees do not enjoy the most basic protections afforded to full time employees in any other industry. Restaurant workers (aside from a lucky few among whom I am fortunate to count myself) do not receive paid time off of any sort, employee provided healthcare, or employee participation in retirement accounts. Kitchen staff are typically expected to work off the clock in order to avoid overtime on top of being paid bare subsistence wages, while dining room staff benefit from a special loophole in labor laws that enables their employers to pay them less than half of minimum wage. This is not to say that restaurant owners are unscrupulous vultures, merely that this is how the business is structured and to change any of that would mean failure because guests would have to be charged a markup that they might consider excessive. Then again if you don’t consider Volver excessive maybe the market could bear it after all.

          • GC

            Tjt’s right. 12.5-15% is more accurate on the total tax collected by the state. I was a bit aggressive in my 20% estimate earlier. 2% goes to the city.

          • Mike Oneill

            I meant being taxed twice.

      • Mick

        For the record, it is not the state that is doing the double taxing. The sales tax used to be charged by the restaurant to the customer and the restaurants were not charged the tax when purchasing. About 10 years ago (I forget the exact year) THE CITY OF PHILADELPHIA instituted a “by the drink tax” which is the 10% charged by restaurant to consumers and goes entirely to the city. see: http://www.phila.gov/Revenue/businesses/taxes/Pages/Liquor.aspx and required sales tax to be collected from the restaurant at the time of purchase. So this is indeed a cost of doing business in the lovely city of Philadelphia tax.

  • Mike

    “Because why should a restaurant sell a scallop appetizer for twice the cost of its ingredients—laboriously transformed into a delicious dish by who knows how many prep cooks and sous chefs”

    Thinking this is “fair,” but wine prices are not is your first problem. Average food costs for restaurants range from 20-30% of the sale price. I work at a center city restaurant that you yourself love, and had no problem paying for. Where are you getting these assumptions? “Keg prices” being fair? Some keg beer markups can be as high at 5x the price of goods. Plus they don’t even need to know their product, let alone spend the money and time to train there servers on each bottle. This article should be in the comments section of the paper, it’s as unfounded as most rants on this site.

  • Joe conte

    You are all wasting your time. Unless you are an extremely powerful politician or lobbyist, none of this will ever change. Argument over

  • Pedro

    What bothers me is that, in conversations with friends in the business, it’s often strongly implied that liquor sales, wine sales included, are used to subsidize menu prices. It is generally understood that BYO prices need to be a bit higher, which seems to confirm this. And if this is true, then it necessarily the case that the restaurant’s return on their investment is higher for these items, *no matter what else is true*. That is, as the man said, just arithmetic. And that means that all the obfuscation about the various costs is moot, since it’s baked into the numbers: whatever it costs, the profit is by definition above and beyond that.

    So then I need to know why I, as a wine drinker, should be comfortable subsidizing someone else’s meal.

    • tjt

      because you’ve decided, consciously, to consume an extra luxury item at the price point at which it’s being offered. Loss leaders abound in businesses–why is someone at McDonald’s who buys french fries subsidizing the next guy in line who doesn’t? etc.

      • Pedro

        Erm, no? That is the point: in a world that offers me BYOs and a scattering of fairly-priced lists, why *should* I decide to pay for that unreasonably-priced luxury item? The industry position outlined throughout this thread is that the price is not, in fact, out of line with other items on offer at the restaurant. But if the alcohol program is subsidizing the rest of the offerings, then that is demonstrably not true.

        • tjt

          because you want it at that price. That someone else makes X or Y profit off of what you purchase shouldn’t dictate whether or not you purchase it. That it is worth X or Y to you is the question. If it isn’t, go to the byob or go to the other restaurant with this “fairly-priced list.”

          Like I said, loss leaders aren’t a surprising or new or suddenly revealed aspect of business and economics. and that might not even be what’s going on here.

          • Pedro

            In other words, the question we’re discussing isn’t worth discussing? The restaurant can charge whatever they want for anything they’re selling, and I can go eat and pay whatever and wherever I want: that is true, and that is also not a useful answer. The implication that I should do it without complaining, on the other hand, is one I find less congenial.

            Look, with commodity goods the answer is simple: If someone charges twenty dollars for a pint of strawberries, I walk away and find a better price for comparable strawberries. The question here is how to factor in that sort of discrepancy – the wine is something I can find and drink at a place other than the restaurant – when making the decision about something that is *not* fungible goods, like a given chef’s creations. And this does matter: that’s why this argument has percolated in our community for at least the thirty years I’ve been around it.

          • tjt

            The point is the way you were asking before was outraged inappropriately. As someone who sometimes orders wine and sometimes doesn’t (and often based on the markup on the wine), the answer seems abundantly clear to me. If the wine is worth that price to you in that context, order it. If not, don’t.

            Besides, the point is a misunderstanding of what “subsidize” means. The selling of wine subsidizes food PRIMARILY because there is additional profit opportunity for the restaurant that sells wine compared to one that cannot. Let’s say (to oversimplify the numbers), every $10 spent on food nets $1 of profit (I know, wildly inaccurate). If, similarly, every $10 of liqour nets $1 of profit, then the wine is subsidizing the non-wine drinkers. Why? Because my table of 4 that buys wine spends $40 on wine and thus gives the restaurant $4 in extra profit per seating compared to the guy next to me who buys the same exact meal but no wine. So I’m subsidizing him, but not in a way in which the wine is providing MORE profit per dollar spent, simply because the wine is additional dollars spent.

            So, by that logic (which seems to be the logic operating here about markups and cost), you are subsidizing your neighbor, but not in an unfair way. Similarly, when I buy an appetizer and dessert and the table next to me doesn’t, I’m subsidizing their entrees*.

            Basically, the argument has circulated because the actual profit margins are largely unknown to customers and we can see markups on wine more readily than on anything else in the restaurant.

            *Now, if the restaurant is instead making a 20% profit off wine and a 10% profit off food, that might be a debatable practice (and if it’s 100% vs 10%, it’s more debatable). But, it’s not a surprising practice nor unique to restaurants. Nor is it a moral problem. I guess that’s where I disagreed–you’re presenting it as though the other diner who doesn’t drink/the restaurant is somehow cheating you when you have a multitude of alternative options if you find their pricing model for wine wrong.

  • Jason Malumed

    All,

    This has been fun, and I appreciate all the good comments so far. I hope this has shed light on some important issues PA restaurants have to deal with in order to have interesting and profitable wine programs. But, I want to get back to the real point at hand here:

    Trey Popp screwed up. He reported incorrect information about a business he was critiquing. Now, that information is out in the world online and will soon hit peoples’ mailboxes all around the Philadelphia area. And we still have not seen an apology (other than him blaming his fact-checkers) or redaction on his part for reporting this incorrect information. All I am saying is that I would like some accountability on his part. It would be a shame if this incorrect information negatively impacted consumers’ perceptions of Petruce.

    • Dan

      Dude, take a breath. I think you’re winding yourself up and making this a tad bit bigger than it is. Sit a couple of plays out and ruminate a bit.

      • Jason Malumed

        Yes, you are right. I’m just tired of lazy journalism.

        • Philly Restaurant

          This is lazy journalism at its finest. The scallops example, the “beer space” and the comments about kegs show the knowledge of restaurants equal to that of a busboy. Food costs at 50 percent equal a bankrupt restaurant. Period. Kegs are delivered and put 6 inches from where they will be hooked up with no delivery issues and about 10xs easier then wine purchases. How has this person reviewed restaurants so much and actually has no idea about them?

    • Trey

      Guest, have you read my post? I don’t understand. You want an apology or a redaction … of what, exactly? I read a comment pointing out that Petruce’s current wine pricing ranges from 2.19x to 3x retail. Thereafter I amended and expanded upon my original, imperfect characterization of the markups as being “triple retail.” Consumers now have an absolute ton of information from which to form a perception about wine-pricing at Petruce. But in case it didn’t register, perhaps it would be helpful if I boiled it down to one sentence:

      Customers who tip 20 percent on drinks as well as food can expect to pay, all told, between a 2.63x and 3.6x markup on Pennsylvania retail prices to drink wine at Petruce.

      I regret that this comment thread, which I hoped would serve as a basis for transparent discussion, has become, to a substantial degree, a platform for people in the wine business to defend high markups on their product.

      I regret it because I hoped this post would cause people to wonder, as I do, why multiplication factors have become so standard in restaurant wine pricing — because try as I might, I fail to understand the rationale for pocketing $40 on a bottle that retails for $20, and $200 on a bottle that retails for $100. Each bottle costs the same to store and pour. The huge variation in wine prices at the retail level — a drastically wider variation than what you find in food-ingredient prices — suggests to me that percentage-based markups may not be the most appropriate way to derive profits (whose necessity no one disputes) from a wine program.

      I regret it because I think Petruce is an absolutely terrific restaurant, with a terrific sommelier, and it was not my intention to suck attention away from those things.

      But most of all I regret it because I believe that the surest way to drive people away from discovering new wine is to charge too damn much for the pleasure of drinking it.

      And make no mistake: it *is* possible to make money while charging less than 3x for wine — which so many commenters here seem eager to establish as some sort of baseline. Vedge does it. Friday Saturday Sunday has been doing it for years, and Le Cheri is doing it right in the pricey precincts of Rittenhouse Square. Bravo to all of them, and I hope they inspire imitation.

      • Jason Malumed

        You don’t understand? What don’t you understand? You unfairly and sloppily criticized a restaurant for charging “triple retail” and called the wine list “pricey”. I went, actually did the math, and proved that this statement was false. You made a mistake, just come out and own it. You are a professional restaurant critic. If you are going to come out and use numbers in a review, you better make sure they are correct. This is someone’s business, someone’s livelihood you are criticizing, and if you are making untrue claims about their business that could possibly hurt them, well, that sounds a whole lot like slander. Is it really that tough to apologize?

        As for your comments about gratuity being factored in to the overall markup, that is just inane. Have you factored gratuity into markups in your other reviews? Every beverage, every piece of food you buy in a restaurant, you are going to pay gratuity on. Do you want the restaurant to absorb that cost so you can drink wine cheaper?

        I think the reason why you regret this comment thread is because you called for people to come out and justify wine pricing. I, who does not work in the restaurant industry, and several others who do work in restaurants, came out, with actual numbers, and gave you answers. Answers that are based on actual facts, not the nonsense you posted here about things like kegs “require more space, on a per-drink basis, than wine or liquor”, and chefs cooking food at 50% costs. And I think these answers just made you look even worse than you did after posting the initial review. So that’s why you regret it.

        And the saddest part is, you just posted a review of Volver, home of the magical $600+ dinner for two, and DID NOT DISCUSS MARKUPS ONCE. It is just dumbfounding. Do they serve any scallop dishes there for $8 that I can go buy now? Why the double standard? (Nothing against Volver, I’ve ate at the bar and had a lovely experience).

        If you think “percentage-based markups may not be the most appropriate way to derive profits,” then please, oh enlightened one, provide us with a better solution. (Actually, that is a futile exercise, since any restaurant that actually wishes to remain open and successful would probably never deviate from their traditional system in order to test out whatever half-baked solution you come up with).

        Sure, high wine prices will drive people away from discovering wine. So why do restaurants have to eat that cost? Would you rather wine be cheaper and food be more expensive to offset it? Or perhaps we can increase the price on beer, since you seem to have no problem paying the 5x markup on beer in this town. Why put the onus on restaurant owners? Why not retail? Why not the PLCB?

        Yes, Vedge, Le Cheri, etc. are all working with markups that are far less than the standard in an effort to turn people on to wine. BUT SO IS PETRUCE (as demonstrated by my math earlier. Feel free to do the math for Vedge, Le Cheri and as many other restaurants as you want). So, stop whining, man up, and just admit you made a mistake. What’s so hard?

      • Stephen Wildy

        Trey I’m afraid I agree with Jason on this one. Lot going on here so excuse the length. My thoughts:

        https://www.facebook.com/notes/stephen-wildy/a-letter-to-trey-popp/10203922858170741

        • Brandon Thomas

          If I was your Facebook friend I would like your letter a million times over. Very well written and spot on. (Though, we are allowed to offer case deals)

        • David Fields

          Steve, aren’t you able to go buy the ‘retail’ priced wine at the State Store and not pay the ‘restaurant’ price? As a licensee you are free to shop at any store, same as a consumer and pay the same price (minus 10% discount plus 8% tax).

          What this entire discussion is missing is a focus about the quality, interest, and distinctiveness that a restaurant is presenting to the public with their wine list. That is the true topic for a critic to evaluate. If one is concerned about pricing, a better metric is ‘value’ which has many, many factors to include, not just percentage markup, but interest, availability, atmosphere, etc.

          How about the fact that 99% of Philadelphia restaurants serve their red wines by the glass at what many drinkers would consider to be too warm, i.e. back bar room temp?

          Also, it’s important to distinguish between glass pour markups and bottle markups. Also Mr. Popp, when calculating markup, one must consider waste, training, corked bottles, sampling, etc. so it’s not so simple.

          And besides who said 3x markup (by whatever definition you want to use) is ‘pricey.’ Why is that pricey? 3X is purely your arbitrary threshold for pricey……

          • JB

            What’s the markup for advertising on FooBooz or in Philadelphia Magazine?

      • Scott Clayton

        Having been both a buyer and seller of wine (and formerly a journalist, in what seems like another lifetime altogether) I’m utterly fascinated by this discussion.

        As can be expected, I fall on the same side of the debate as do Stephen and Jason. The fact remains that Mr. Popp was negligent in his research and passed along incorrect negative information in a review of exactly the type of establishment that any food and beverage loving consumer in Philadelphia should want to succeed. Given his position and influence, his article could have a definitive effect on the revenue at Petruce, et al, a new establishment that is surely still paying off many of the costs of opening a small restaurant in Philly and is therefore scraping for every dollar.

        What I find most upsetting, however, is that Mr. Popp essentially trivializes the what I found to be the most rewarding part of being a beverage manager – finding the relative bargains in the wine world.

        I’m not going to speak for Mr. Kweeder, whom I do not know, but in his position you are presented with dozens of $10 bottles of wine by purveyors. I always thought it was my job to select the one that over-delivered at that price. Stephen alluded to this in his open letter. When a guest falls in love with that wine in the restaurant, I’d never hesitate to give them all the information needed to track down the wine for purchase and home consumption. Never did I fear or try to hide the discovery of the retail price of the wine because they’ve already decided they loved it and it was worth what they paid in the restaurant, even if it was a $10 bottle sold at $42. The value of that wine may be $10 at home with a microwaved pizza, just as much as it’s worth $42 with a suckling pig at Amada.

        Whether intended or not, the review and the revisit devalue the work that Mr. Kweeder has put into his profession. The value of a wine inside a restaurant and on the shelf at your nearest state store just seem like two different things to me. Thankfully, Philadelphia and New Jersey have a veritable army of knowledgable buyers in whose hands I will gladly place myself.

      • Rob

        Mr. Popp,

        I guess what I regret the most is that that you are either a) at the very least completely ignorant or, b) (more than likely) totally insensitive to the cost of running a small restaurant within the confines of what is dealt to us from the PLCB and the City of Philadelphia at large.

        What has been overlooked so far is the cost of doing business as a small restaurant or group of restaurants (i.e. not a chain that can absorb costs). Every chance we have to hit a better margin that we take allows us to be open the next day, the next week, the next month, the next year, so that we can continue to deliver to our guests the experience we set out to share in the first place. It is actually irresponsible on the part of the sommelier, the chef, the restaurateur, to not do so. Far too many restaurants that haven’t been able to do so, whether it be internal or external causes, have gone the way of the buffalo.

        It is very easy to put any wine list under a microscope and deduct what the restaurant is making from it (to that point, please see Mr. Wildy’s excellent and illuminating treatise on the subject.). What you are not seeing is that this cost to the guest has really nothing to do with what a bottle of wine costs a restaurant.

        That margin you speak or (an unfair 3X mark-up!!!!) not only pays for more wine, it allows the establishment to stay open. To buy more wine. To conduct business continually on a day to day basis. To continue to give our valued guests a wonderful experience that hopefully they continue to come back for. But it allows us to do more.

        It allows us to pay for rising labor, liquor, and food costs. It allows us to pay for fixed costs like electric, gas, water, and rent. In so far as the rent aspect goes, a small restaurant in Philadelphia may pay upwards of 6000-9000 dollars a month, just for the brick and mortar, assuming the business owners don’t actually own the property. You may not be good at the whole math aspect but I am sure we can both agree that on even a high margin, that is more than a few bottles of wine to be sold to even come close to a number like that.

        We are also not factoring in rising property taxes (to be paid by the business owner, not the landlord), any improvements or repairs to the restaurant (again, to be paid by the business owner, not the landlord), as well as depreciation, a liquor license, insurance of every kind, workers comp, accounting, miscellaneous fines, taxes, and fees, etc. You get my point.

        It is facile to assume that what you get every time you sit down to a meal you can judge at face value (if you are getting your protein costs from Whole Foods then you need to do some further research). The larger point that I am trying to make, albeit in an awkward and long-winded way, is that restaurants exist because there are people out there that value them for what they are, a luxury. A moment to share with a friend, a family member, a lover, or any combination of the above, or simply to sit by oneself and forget about the day. That is the reason people like myself go to work, everyday, six days a week, to a 12-16 hour day, months if not years on end, because we love what we do and we actually believe in it, for some reason. To diminish the efforts of all involved by merely speaking about mark-ups, tax, and gratuity, you mar and drag through the mud the whole beauty and simplicity of it all. A discussion of the real costs of goods really do not belong in a review. If you, or your readership, don’t want to pay for what goes into a bottle of wine or plate of food then maybe you should stay at home. At which point restaurants won’t make their wine costs, food costs, and fixed costs, and ultimately will have to close. At that point, we can all go to P.F. Changs together and celebrate.

        I am not placing blame on anyone not informed, I just think that maybe, you ought to be.

        Also, I, or none of my peers isn’t looking for martyrdom, just a little understanding, so please don’t take it as thus.

        If something isn’t delicious, then, by all means, share your thoughts. Otherwise, please let us conduct business as we see fit, it’s our livelihood, not yours.

      • megan storm

        Here’s a few quick comments on the markup debate before I get to what I really find off.

        Reviews are a great way of getting the word out there and creating buzz, good or bad, about newly opened or revisited restaurants. We all want a well-informed audience and consumer and to spark interest and establish the trust of readers and guests.

        Markups seem like the hot button issue, and not to take away from this discussion, but they are becoming a road block for
        establishing that trust between restaurants and diners. And it is misleading with an absence of a background on PLCB SLO markup as Stephen, Jason, David and others have now opened the book
        on in previous comments.

        I’m going to avoid throwing anymore numbers out there.
        I’m horrible at math and it is not what bothers me most with your
        article. I’ve had more time to digest the markup; admittedly the PLCB has me feeling a bit defeated when it comes to changing any of this. I do think awareness is the best option we have presently and thanks JM for drawing attention to this.

        So here’s what really makes me upset, shudder even, and I’m going to take the opportunity to point it out –

        “With wine, all the labor’s already in the bottle, so that’s no justification for a markup.” You believe that a three times mark up for the cost of a wine bottle is only “for the service of storing and
        opening it.”

        But you go on to state that,

        “I think Petruce is an absolutely terrific restaurant, with a terrific
        sommelier, and it was not my intention to suck attention away from those things.”

        Wait, what? Is a terrific sommelier synonymous with someone who only stores and opens wine? Store and pour? Geez Trey.

        This is as misleading as forgoing to mention PLCB SLO markups. You inaccurately describe the duties and intentions of sommeliers, and as a result, discredit all wine professionals. Some facts you fail to mention here are how Tim Kweeder, along with David Fields, contacted several importers in New York to bring in wines that were previously unavailable in Pennsylvania, waiting months and sometimes almost a year, to be able to offer them in Philadelphia restaurants. How they and others continue to seek out unconventional, noncommercial winemakers who do not mark-up astronomically and strive to make honest wines and livings despite the PLCB’s red tape.

        What upsets me is the integrity of beverage directors is up for debate. What upsets me is the whole disregard for the efforts of all parties; producers, importers/distributors, brokers, sommeliers,
        private collectors, even the PLCB. Furthermore, the implication that wine is not as valuable to a guest’s experience as other aspects of dining out. I understand that not all diners value the beverage program as much as food, service, or even atmosphere, but there are certainly some who do.

        Before guests walk through the door, sommeliers have selected the wines that they will consume and top beverage directors do this with the guest’s best interest in mind, regardless of where a guest may place wine on the scale of importance.

        Their tastes, budgets, occasions, comfort levels and curiosities have all been carefully taken into consideration. Just as talented chefs have spent hours menu planning, seeking out ingredients, testing, and budgeting, so have beverage directors. Beverage programs are not an afterthought or solely a means to generate revenue to them. They exist to compliment the efforts and flavors of the food and to be enjoyed on their own as well. For sommeliers like Kweeder,
        beverage programs are just as closely considered as the food, service, and atmosphere. They are a point of hospitality.

        I’m reminded of the opening dialogue from a panel I sat on with four wine professionals. The proctor started by asking the audience if anyone actually visited a restaurant just for the beverage program. The five of us stared at each other, briefly concerned as to what we were all doing there. After some silence, Jen Carroll stuck her neck out and reassured us that she did, citing the program at AKA Rittenhouse, where Kweeder was currently managing the beverage program.

        We all make choices. We calculate worth. We take chances. We do it with wine.

  • phillywinedrinker

    One of the reasons I own lots of wine is the ability to patronize BYOs and drink my wine there. Its an unusual privilege and a by-product of our strange liquor laws. Restaurants as sellers can name their asking price for wine and I can choose whether to go there and purchase wine at my meal. I generally choose not to because I can’t get my arms around paying @$60 for wine I bought for $22. Their choice to price and my choice not to buy. It does seem that Philly wine list prices are higher than elsewhere–I’m in Massachusetts this week and went out to a restaurant where the markups appeared to be about 30% rather than 200%. That makes me a wine buyer of better wine.
    Generally, I do want to know in a review about the wine byo and pricing policies. Of course I hope and expect the information that is provided is accurate and it sounds like it was not in this case. I suspect I won’t rush to Petruce because of their wine pricing policies as I have plenty of byo choices–again, their choice to set their price and my choice whether to pay it.

    • https://twitter.com/PhillyBestBYOB Philly’s Best BYOBs

      I lived in MA for a decade before moving to PA 3 years ago. The markups in MA restaurants are no different on average than other states.

      MA does have ridiculous anti-consumer liquor laws that rival those of PA, or are even worse (for example, BYOB is illegal in most of MA, although you can often get away with doing it under the table).

  • Trey

    Thank your for the further comments, everybody. They express many fine and nuanced points (as does Steve Wildy’s open letter) — plus a few that I do not find persuasive — and I’m eager to move this discussion forward in a civil manner. I intend this post partly as a placeholder until I (and hopefully a few others) have time to take the discussion another step, and partly to solicit questions that people would like to see addressed.

    I think Steve correctly observes that most of the people in this discussion would love to live in a city where a) wine is affordable, and b) restaurants can make sustainable living selling it. Now, clearly those wishes are in tension — but I continue to believe that searching for a more perfect middle ground is worthwhile.

    Part of resolving the tension between the wish for affordability and profitability may entail, to put it frankly, remedial education for consumers. And critics. (Read: me!) For instance, Steve lays out a terrific, concrete example of what a sommelier has to contend with if he wants to offer bottles of Nino Negro Quadrio Valtellina, a wine that the PCLB effectively sells on an uneven playing field: charging retail consumers $17.99, and restaurants $24.99.

    “Now if Tim Kweeder marks Nino Negri up 2.6x from $24.99 to $65,” Steve notes, “it’s all too likely that a guest will enjoy it, look it up for purchase when they get home, and surmise that a $17.99 bottle was marked up 3.6x.”

    Yep, that would stick in many a consumer’s craw. And many a consumer — me very much included — would mistakenly chalk it up to Kweeder, when the state of PA may merit a larger part of the blame. (Let me take this opportunity to apologize further to Tim for the mistake — wholly my own — of characterizing Petruce’s wines as “triple retail.” And also to further applaud him for assembling a great wine list and offering a lot of it in 3- and 5-ounce pours that, as I wrote in my review, impart substantial value to the experience of dining at Petruce.)

    In a similar vein (i.e. remedial education), Steve notes that when he orders wine for a restaurant in NJ, not only does he pay wholesale rather than retail prices (which I knew), but he can get it delivered for free whereas in PA he either has to pick it up from PCLB, which entails a labor cost, or pay $45-85 to have it delivered (which I did not know).

    Steve also describes, more vigorously than I did, the value a good somm brings to the diners he serves. “People like Tim can tell you about the hands that picked the grapes and the grandfather who held them steady when he taught them how. Popp agrees there is some value to this. So, what is it, a $10 flat fee per bottle for the
    service of storing and opening it?”

    That question merits further discussion. If I’m interpreting Steve’s tone correctly, he thinks a $10 flat fee is too low. Phillywinedrinker, meanwhile, thinks that $60 for a $22 retail wine is too high. There’s a lot of middle ground in between those, and I want to explore it. And also the question, which had always seem settled to me but which this comment thread has obscured, of whether wine (and other alcohol) can be said to “subsidize” a restaurant’s food. That is, whether a restaurant’s profit margin on wine exceeds its profit margin on food. Because if so, as commenter Pedro puts it, “I need to know why I, as a wine drinker, should be comfortable subsidizing someone else’s meal.” I think this is a question that nags many people who love drinking wine with dinner.

    Understand, however, that I 100 percent agree with commenter Megan Storm that there’s one subsidy that no wine-loving diner should object to: the need for wine prices to subsidize sommeliers and beverage directors of Kweeder, Wildy, and David Fields’ caliber. (And though middlemen are often left out of the discussion, certainly folks like Jason Malumed and Storm herself should be able to make a living through their efforts to introduce and procure exciting wine for sommeliers.)

    A sommelier who introduces you to a new wine you like has done a valuable service — especially if they’ve found a bargain that you can then act on next time you hit the store. On the flip side, I think that service is a little less valuable when the wine in question is really expensive — which is the main reason I suggested that marking up wine by means of a percentage, as opposed to a flat fee, is not all that consumer-friendly. After all, if Tim/Steve/David turns me on to a wine I can buy for $17/bottle at PCLB, well, they’ve done me a favor that’s worth more than $10, and maybe indeed worth as much as $27 (which is what I’d be paying at a 2.6x markup). If they turn me onto a bottle that costs $50 retail, however, I personally value that favor at less than $27 — i.e. *way* less than the $80 a 2.6x markup would carry in that instance.

    So it’s fair to say that one of the things I would like to understand more clearly is why percentage markups rather than flat markups have become the status quo. I think one of the things Steve and a few others would like to know is why I brought gratuities into it, and whether that issue belongs in this discussion. (I think it does, but with more context than I supplied for it.)

    But just as much, if not more, I would like to gain a clearer understanding of the best ways I and other consumers can advocate for incremental changes to PA practices to bring down the price of wine for all. The prospects for full privatization in PA may be dim, but that doesn’t mean there aren’t smaller-bore targets that thoughtful advocacy could budge. During a brief phone chat last night, Steve mentioned that some of the participants in this discussion have been boning up on state and federal law and trying to identify targets for incremental improvement. Talk about an effort that deserves universal support!

    Alright, that’s incomplete, but enough for now. Does anybody else have questions they wish this discussion would address, or address more thoroughly? Please share!

    • Daniel Robinson

      Mr. Popp. I’m replying to your comment, because I wanted to make be very direct. From what I can tell you posted an article. You stated that wine mark-up and Petruce was at 3x retail. Mr. Malumed responded pointing out that this was incorrect, with figures (which you have not disputed) that seem to back this up.

      You wrote a response in which you stated that you lost your notes, and that you only “expect,” but are not certain that your facts, if they can be called that, were checked.

      You then followed your initial inaccuracy, with a litany of more inaccuracies, misinformation, and absolute nonsense. This has already been covered, but I will reiterate. Draft beer does not take more space to store than wine. A 50% food cost is net reasonable. It is far too high for any healthy business.

      Including a the cost of gratuity in the mark-up is ridiculous. A gratuity pays for a service, provided by a server, bartender, most often aided by a support staff. To include the cost of a separate service in your calculations of an item’s mark-up simply doesn’t make any sense. No amount of additional context will change that. A gratuity increases the final cost of a restaurant meal, but does not effect the mark-up on a bottle of wine.

      I have a few questions, which I hope that you can find the time to provide direct answers to.

      1) Was your writing inaccurate?

      2) Do you admit that you portrayed a basic ignorance of the workings of industry of which you, as a restaurant reviewer for a major magazine, are a purported expert?

      3) Should a journalist lose their notes? Should a journalist merely”expect” or should they by certain that their facts were checked?

      4) Before writing this response did you consult anyone who works in the restaurant business? A sommelier, a wine buyer, or a beverage manager? Did you do any research?

      5) “A Second Look…” appears to be merely misinformed, uneducated opinion, with little basis in fact. Do you consider this to be good journalism?

      You should consider yourself lucky that the discussion your piece spawned has focused considerably on the minutiae of wine pricing in Philadelphia, rather than your journalistic shortcomings.

      • Daniel Robinson

        I believe this piece has garnered this type of response because of the nature of what many of us do. In restaurants things will go wrong despite the talent and hard work of everyone involved. Bad plates are sent out. Subpar service is given. However, it is a truism that every negative response presents an opportunity. Disapointment, if met with an earnest apology and a good faith effort to rectify the issue almost always results in good will and a faithful guest.

        Everyone involved would have a great deal more respect for you, Mr. Popp, were you to simply admit, “I made some mistakes. I wrote a bad piece,” and show that you are making an effort to not repeat the same mistakes.

        • Trey

          Daniel,

          You are right — and I have done this. I inaccurately characterized the wine markups at Petruce as “triple retail” when they average 2.6x. As soon as Jason Malumed pointed it out, I immediately wrote a post confirming the accuracy of his math, acknowledging my mistake, and correcting the record. When Steve and others pointed out shortcomings of *that* post, mainly to do with the inside workings of beverage buying to which I am not privy — but am grateful for Steve sharing — I posted another long comment further owning my mistake, and apologizing to Tim for it (which I also did in a Tweet — to a paltry number of followers, very true, as I only just joined Twitter and had never really used it before — but making sure to direct the tweet to four people with a combined 21K followers, expecting that they’d retweet it).

          For the record, I did not “lose my notes”; I discarded the wine list from my meal at Petruce, which was quite different than the current one. I would also point out that the (second) part of the original post, which raised so many hackles, did not purport to be an authoritative exploration of mark-up policies, but (as I explicitly wrote) my own personal answer to the question posed by a commenter who asked: “Why do people gladly pay 3x+ for beer or liquor, but when it is wine, you feel ripped off?” I intended my answer as a string of thoughts spurred by that question. Because it was an off-the-cuff response, so to speak, I did not take as much time and care as I might have done. For instance, when I offered as an example the hypothetical markups of a scallop dish and a wine bottle, I used the word “ingredients” when what I really meant was “inputs,” as the latter term would include labor whereas the former does not. (Food prep requires a lot of labor.)

          At any rate, I hope everybody will stay tuned for a sort of roundtable conversation that is in the works, which will be a chance for people with various areas of business expertise to broaden my and others’ perspectives on this issue.

  • Cristine Hoffman

    While I am appreciative and applaud my peers standing up to lazy journalism and the fact that this article has helped shed light on the ridiculousness that is the PLCB, I find the discussion of the pricing of wine and food in restaurants completely distasteful.
    Restaurants are not pulling the wool over your eyes.
    This magical thing called the internet exists. The PLCB search engine (even with all of its misspellings) exists. (most) Restaurants post their food and drink menus online. If you are a consumer, it is your right to look up what they offer and judge their prices accordingly. If you don’t have the money to pay for what you want, you don’t get it. Or you do, it’s your decision. And no sommelier, beverage manager, wines sales person, waiter, captain, chef, sous chef, dishwasher or any hospitality professional can change that. The guest always has the choice to take that bottle of wine at a meager $10 markup or a 5x’s markup. It is not forced on anyone.
    No one is holding a gun to your head and telling you to go out to dinner anywhere.
    You choose to dine out.
    You pay for it.
    There is a premium on luxuries. Dining out is a luxury. Though it’s so easy to forget this with the accessibility of such amazing restaurants, it is not a right, it is a privilege.

    Value is consumer driven perception. I think it’s sad that a “professional” commentator on restaurants such as Trey, would seek to villainize anyone in this tiny hospitality community. Your perception of value, Trey, is different than all of your readers, by declaring something “pricey” you have deemed it not of value and given your readers a reason to not visit a fabulous restaurant based upon your perception of pricing rather than the actual wine itself or Tims knowledge and hospitality. Pitting the consumers against the people who price the menus doesn’t do anyone any good. It seeks to devalue actual professionals such as Tim, by putting his judgement into question. Intentional or not, it’s a pretty awful thing to have done.

    The saddest part is that he is being forced into an apology.
    His words will mean less now than they ever have.

    My parents are simple country people, but they not only taught me the difference between a right and a privilege, but also that if you have to ask someone to say something, know they are only saying it because you want them to and not because they mean it.

  • Tonyjlive

    1) Petruce et al was amazing when I was there last. Simply amazing.
    2) I appreciated the gems I found on the wine list, especially knowing they were so carefully sourced.
    3) David Fields has an excellent idea to bring some of the best talent together to strategize about a solution. Great minds focus on a solution rather than get weighed down with the problem.
    4) Shout out to Steve Wildly who wrote a great letter, outlining many of the intricacies we as consumers don’t see behind the scenes. Yet, more importantly imho, took up for a fellow industry mate who is widely regarded as one of the best, nicest and most knowledgeable people in the business. Respect.
    5) I’m am now, officially thirsty

  • tijuana

    Aaaaaaaaandd your winner, Steven Wildly!!!!!!!!!!!

  • Benjy Satlow

    This is all beside the point. Jason, Steve, et al (pun intended) your comments are well researched and elucidating, and thank you for them, I’ve worked in Philadelphia restaurants for over a decade and just received a crash course in wine pricing thanks to you. But the truth is we wouldn’t be having this conversation if this was a review of any, and I mean ANY, other type of business. A restaurant is a business like any other, one that earns money by selling product at a profit. Nobody ever complains about the markup on a plant at a nursery or a pair of pants at a clothing store; we either do or do not buy these things and get on with our day. Restaurants are unique in suffering from a peculiar glitch in the human condition, namely that people, like any other animal, feel extremely vulnerable while eating and are therefore predisposed to feel slighted at restaurants. This is why some people see the table they are seated at as an opening bid in a negotiation and others feel it is appropriate to comment on their server’s facial expression. These are things that no doctor, accountant, or bus driver has to contend with. Yet those of us who are employed in restaurants deal with them each and every day. And we do so with an accepting smile and maximum accommodation. A restaurant, like your neighborhood hardware store, may mark up any product they want however much the market will bear. In the case of wine, if the product being marked up is familiar and readily available, the market will not in fact bear it.
    The reason Mr. Popp’s comments on wine markups are so galling, aside from his departure from basic tenets of journalistic integrity, is that he found the decidedly wrong bone to pick in the morass that is restaurant profit management. This is a business in which the vast majority of full time employees do not enjoy the most basic protections afforded to full time employees in any other industry. Restaurant workers (aside from a lucky few among whom I am fortunate to count myself) do not receive paid time off of any sort, employer provided healthcare, or employer participation in retirement accounts. Kitchen staff are typically expected to work off the clock in order to avoid overtime on top of being paid bare subsistence wages, while dining room staff benefit from a special loophole in labor laws that enables their employers to pay them less than half of minimum wage. This is not to say that restaurant owners are unscrupulous vultures, merely that this is how the business is structured and to change any of that would mean failure because guests would have to be charged a markup that they might consider excessive. Then again if you don’t consider Volver excessive maybe the market could bear it after all.

    • http://philadelphia.foobooz.com/ Art from Foobooz

      airlines customers complain about the cost of baggage. Sports fans complain about the cost of souvenirs. I don’t think restaurants are particularly unique in this case. Anywhere you can be upsold, people will quibble over the cost of that upsell.

      • tjt

        Seems to be a somewhat unfair comparison. A customer complaining about something is different from a professional critic complaining (and, in this case, it’s like criticizing Southwest for excessive baggage fees, as Petruce’s wine list is actually relatively unmarked up in comparison to others).