We all know that restaurants mark up their wine. But you may be surprised at which restaurant wines on the menu are typically the most overpriced.
It’s widely believed that the second cheapest wine is the worst value. The theory is that the restaurant is exploiting naïve customers who are too embarrassed to order the cheapest bottle of wine on the menu for fear of looking stingy.
Researchers from the London School of Economics and the University of Sussex decided to test the theory, known as the “embarrassment theory.”
It turns out that this assumption is wrong. The second cheapest bottle is not generally the most overpriced restaurant wine on the menu.
The study was entitled Is the Second-Cheapest Wine a Rip-Off? Economics vs. Psychology in Product-Line Pricing, and published in the Journal of the American Association of Wine Economists.
It analyzed 470 wine lists from 249 London restaurants, totaling 6,335 wines. The restaurants’ wine menus were all pretty short; none of them were more than three pages.
The study found that the mean markup on wine from retail to wine list was 303 percent. However, the biggest mark-ups weren’t on the second cheapest wine on the menu. That, the study authors said, was an urban myth. Instead, the most overpriced restaurant wine is usually closer to the center of the list.
“Our study challenges the notion and finds that the percentage mark-up on the second cheapest wine is significantly below that on the third, fourth, and fifth cheapest wine and well below the peak mark-up, which tends to occur around the median wine on the menu,” said Professor David de Meza, one of the researchers, in a press release announcing the study.
The study also found that buying by the glass wasn’t substantially more expensive than by the bottle, contrary to popular belief. Drinking by the bottle only saves seven percent.
And while one may not want to order the most expensive bottle on the menu, it may actually be the best bargain relative to its retail cost.
“Having the highest percentage mark-ups on the middle wines can be logically explained. It would be reasonable to assume that at the low end of the wine, margins are kept down to encourage consumption. At the high end, low margins induce customers’ upgrading to the more expensive wines on the list,” according to Professor Vikram Pathania, another researcher.
The authors concluded the study with advice to diners.
“Behavioural factors imply either the cheapest wine or top end wines are the best buys, in which case the appropriate maxim is, don’t get stuck in the middle!”
This news may be particularly helpful now that we’re coming out of pandemic hibernation and returning to restaurant dining. It pays to know to watch out for high markups and which restaurant wines on the menu are more likely to be overpriced.
I’m also more inclined now to review a restaurant’s wine menu beforehand, so I know what’s available and how it’s priced.
The bottom line for us diners: drink what you want to drink. But if you’re not sure what wine bottle to order, at least we now have a better idea of which wines on a restaurant’s menu are the best value.
We hope these insights about which restaurant wines on the menu are the most overpriced will help you the next time you’re ordering wine in a restaurant. This study certainly opened my eyes.
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