I think it is generally accepted that British restaurants make most of their profit on sales of alcohol. As a wine lover I dislike that practice, but I am going to resist the temptation to rant about it; I am going to examine why it happens to be the case.
I have seen speculation that it may have started as a result of wartime austerity measures. Restaurants were not allowed to charge above a certain amount for food, but there was no limit on wine prices. So restaurants kept their income stream going by selling any available wine at very high prices. Then, after restrictions were lifted, we were so used to relatively cheap restaurant food and expensive wine that the pattern persisted. Now that might be complete nonsense, but it is a nice theory. Let me know if you know better.
Regardless of its origins, it is clear to me why this pricing pattern continues today. Restaurants compete only on the price of food. Special offers are almost exclusively on food, with deals on multiple courses, or for food ordered when the restaurant is not so busy. Only rarely do offers apply to wine. Indeed, restaurants go out of their way to hide the value of the wine they serve. They prefer to stock wines that rarely appear in shops, and their suppliers feed that preference by selling specially created brands that are not sold through retail channels. Anyone would think that restaurants were trying to hide their markups on wine.
Also, they are not so keen on advertising wines prices. Practically every restaurant displays a menu by their door, but how many display a wine list, or even a selection from their list? I did a quick survey of restaurants close to where I live. Out of the ten in my sample area, only two displayed a wine list.
There was a large range of quality and style in the restaurants I checked, but one things they have in common is that they do not belong to large chains. Chain restaurants usually do display a wine list, and I’m guessing the reason is that they employ legal advisers – because actually all restaurants are required by law to display their wine list. According to a guidance note explaining the legal requirements: “For an eating area, prices must be shown at or near the entrance so that the prospective consumer can see them before he enters; a restaurant with direct access to the street will therefore be required to show prices so that they are visible from the street.” It goes on to say: “When wine is sold for consumption with food (but not when merely sold among other drinks), the price of at least five wines – if this number is available – must be displayed.” So, many restaurants are not merely keeping us in the dark about their wine prices; they are breaking the law in doing this.
As restaurants in general are now so clearly intent on competing on the price of food, while hiding the price of wine on which they make more profit, there is clearly no incentive for any restaurant to break rank and distribute markups more evenly. A good first step towards encouraging competition on wine pricing would be effective enforcement of existing consumer legislation.
I don’t particularly want to shop my offending local restaurants to Trading Standards, but I am tempted. Not because I feel particularly vindictive to those restaurants, but because the couple of places that do display their wine lists have very reasonable markups – and I’d like to see them get more trade.