AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org

AAWE Working Paper No. 195 – Economics

Factors Impacting Wine Price Mark-Ups in Restaurants

Florine Livat & Hervé Remaud

Abstract

◦ The purpose of the study is to analyse the determinants of wine price mark-up in restaurants. Wine sold at the restaurants is a substantial contributor of the restaurants’ profitability and better understanding factors impacting mark-up is critical for the industry.

◦ Sommeliers around the world, mostly members of the International Sommeliers Association (ASI), have been approached to complete an internet based questionnaire, from February to May 2014. Of the 800 who started the survey, 267 fully completed the questionnaire, generating 1869 observations. W e regress the declared mark-up against restaurant’ s and wine list characteristics, including managerial practices, and wine stewart characteristics.

◦ If the restaurants apply a simple rule of thumb to set wine prices, when focusing on every price segment, it appears that sommeliers doesn’t matter that much. The restaurant positioning and style is more likely to explain a positive impact on wine prices’ mark-up.

◦ Our findings suggest to adopt a more holistic perspective on mark-up decision, based on various criterion including: the long experience of the sommeliers, the ability to ‘capture’ clients of the hotel attached to the restaurant, and a fine dining positioning.

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