Tips from the pros on how to drink well in leaner times

If dinner and drinks at your favorite restaurant tugs a bit harder on your wallet these days, you’re not alone. Whether in Los Angeles, New York or Chicago, the cost of dining out has skyrocketed in recent years.

Despite grumblings, few consumers call out restaurants for specific markups on food. When it comes to wine, however, diners can be a lot more scrutinizing, irate even, when their trusty $20 bottle of sauvignon blanc from Binny’s is listed for $60 on a restaurant menu.

At a quick glance, beverage markups may seem borderline extortionary. Beverage sales have always represented the highest profit margins for restaurants because preparation and service costs are much lower for beverages than for food.

For decades, the national standard for wine markups in fine-dining restaurants hovered at roughly three times what a restaurant pays for a given bottle. Wines by the glass are typically listed at prices similar to the wholesale cost of the entire bottle.

But in recent years, particularly post-COVID, restaurant markups nationwide have inched noticeably higher. Even in Chicago, it’s not unusual to see markups that are four or five times what restaurants pay.

Restaurateurs say these profit margins are lifelines. “Profit margins for restaurants are the tightest of any industry,” said Amy Morton, who owns and operates multiple Chicago-area restaurants, including LeTour, the Barn Steakhouse and Stolp Island Social. “My dad (Arnie Morton, founder of Morton’s Steakhouse) was so excited just to make 6% net,” Morton said.

High margins on beverages offset high fixed expenses like rent, as well as the high costs of labor and waste associated with food. Post-COVID, operational costs like wages and benefits have soared alongside spikes in food and energy costs.

“The No. 1 cost that skyrocketed was labor,” Morton said, “not only wages but what employees deserve in benefits.” The pandemic, she suggests, was a sobering realization about the magnitude of health care costs that changed the restaurant industry indelibly.

Doug Psaltis, the chef and owner of Andros Taverna in Logan Square and Asador Bastian in River North, echoes Morton’s sentiment. “We all advocate for fair wages, paid time off and better working environments,” Psaltis said, “but all of that comes with a cost that can only be absorbed by the pricing of food and beverage.”

For many consumers, high wine markups can be jarring when the value added to a bottle of wine in a restaurant isn’t always obvious.

“If you’re selling stuff that can be found at your local supermarket, steep markups are hard to justify,” Psaltis said. “That’s why we tend to offer wines very selectively — wines without a lot of availability, often from small producers with deeper stories and made by production methods we stand by.”

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The greatest value added to wine in restaurants, suggest both Morton and Psaltis, is the guidance that experienced wine professionals and their staff can offer. Guests are often too intimidated to ask their sommelier or server for advice on wine, but being honest about your preferences and budget is the best way to find value on a wine list, suggests Morton.

Larger restaurant groups purchasing wine in high volumes may choose to pass savings on to their guests. At Gibsons Restaurant Group, which operates a dozen restaurants throughout Chicago, “offering really great product at a fair price — our quality-to-value ratio — is the biggest pillar within our company,” said Cassandra Sakai, the corporate director of beverage operations. “We’re always keeping our eye on competition, making sure we offer the lowest wine prices possible.”

More bang for your buck can also be found by exploring wines from lesser known or underappreciated regions and producers. Andros Taverna, Psaltis explains, “is a 100% Greek wine list so we’re able to offer great wines at a great value.” He says the restaurant wants to reinforce the idea that wine can be enjoyed with every meal, not just celebrations. At Asador Bastian, his Basque-inspired chophouse, Psaltis highlights affordable wines from young, emerging Spanish winemakers alongside more established trophy wines.

It’s not necessary to buy the most expensive wine on a list to enjoy a great bottle, Morton said. But if you’re determined to pay the lowest markups on wine, she cautions against choosing the cheapest bottle on the list.

“A good rule of thumb is that the less expensive a wine is, the more we may mark it up. The more expensive, the less we mark it up,” she said. “It’s all about the margin for us, so if I buy a wine that’s $86 wholesale, I’m not going to mark it up three times, it’s more likely I’ll mark it up just once.”

Anna Lee Iijima is a freelance writer.

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