With diners taking their first cautious steps back into restaurants this summer, millions of Canadians will soon be grappling with a familiar pre-pandemic problem: ordering a bottle of wine.
On top of taste preferences and food-pairing concerns, one of the biggest factors that goes into the decision tends to be price. Many diners opt for either the house wine or the cheapest one on the menu. Oenophiles, meanwhile, tend to reach for something more pricey, but most diners go for something in the middle — with no idea where the best bang for the buck lies.
A recent study from British researchers at the London School of Economics and the University of Sussex attempts to answer that age-old question — and the numbers hint at some counterintuitive conclusions.
The researchers looked at 249 restaurants in London that had wine lists posted online. In total, the restaurants that were examined had 6,335 different bottles of wine listed online — a large database that the researchers were able to cross-reference against retail prices for those same bottles.
In a finding that will come as no surprise to anyone who’s ever ordered a bottle of wine to go with dinner, the price of a restaurant wine was found to be, on average, about 300 per cent more than it would cost at the retail level. And while markups vary depending on the restaurant and type of wine, there were some broad trends in the numbers that drinkers may want to quaff.
‘Is the second-cheapest particularly bad?’
A well-trod urban legend has it that the most popular wine on a restaurant wine list is often the second-cheapest, because most people like the idea of buying a cheap wine, but not necessarily the cheapest. “It is based on the idea that people don’t like looking cheap when they sit in a restaurant,” said Vikram Pathania, an associate professor of economics at the University of Sussex who co-authored the report.
“You don’t want to go to the cheapest because, well, your dining partner or the waiter stare at you … so you study the wine list hard and long — then go to the second anyway,” he said in an interview with CBC News.
Following that logic, conspiratorially minded diners have long suspected that restaurants are aware of that impulse and will therefore adjust their wine list so that the wine that is cheapest for them to acquire will be priced second-cheapest to compel diners to buy it, in order to maximize their profit.
“The argument goes that people who run restaurants know this, and they can actually charge a fat markup on the second, exploiting this stigma of ordering the cheapest,” Pathania said.
But according to his research, the theory doesn’t hold up — the second-cheapest bottle of wine on the menu is actually a decent value, with the markup only about 25 per cent more than one would pay for the cheapest bottle of plonk on the menu.
“To be fair, you are being ripped off if you buy bottles of wine in the restaurant. But the question is: Is the second-cheapest particularly bad? And no, it’s not particularly,” Pathania said.
The researchers discovered that the markup on wine tends to peak in the middle of the wine list, while the wines at the bottom and top of the price scale often offer the best value. (CBC)
Where diners really get corked, the data suggests, is when they order wines numbered three through six on the menu. Then the markup can be more than 50 per cent higher, on average, than the best bargain on the list.
Markups in absolute terms are obviously higher for the most expensive bottles, but in percentage terms, higher-end wines are actually often a better value than the cheap offerings, the data suggests.
Even better news for frugal foodies is that the cheapest wine does actually tend to be the best value. “The cheapest is actually a relatively low markup, then the second-cheapest is slightly higher. Third is even higher. It kind of peaks in the middle, and then towards the high end, the markups start falling again,” Pathania explained.
Rules different in Canada
Toronto restaurateur Suzanne Barr has run kitchens and restaurants around the world, including more than one in Canada, and she says while it’s true that alcohol sales can be a reliable money-maker for restaurants, they are less of a cash cow in Ontario because of the way the province regulates alcohol via the LCBO.
Unlike many other jurisdictions where restaurants pay wholesale rates, for the most part any business selling alcohol in Ontario pays the same price as drinkers. “What a lot of people don’t understand is that glass of wine that we’re selling for $15, we’re maybe making, I don’t know, $3 or $4 off of,” she said in an interview.
Barr says most restaurant owners craft a wine list the same way they craft a menu, to make sure it follows a theme and goes with the overall atmosphere of the place. But they are obviously aware that there’s money to be made on some bottles over others.
“It’s like having a [go-to] dish on the menu,” she said. “It’s not gonna cost us that much to make, but we know we’re gonna sell a whole ton of these.”
Barr says that with the return of restaurant dining, she suspects customers will be compelled to splurge more than they did before the COVID-19 pandemic and buy that expensive bottle to treat themselves after they’ve been stuck eating at home for so long. “Because maybe when I go to the LCBO or the Wine Rack, I’m just gonna get that Yellowtail because that’s really what I can afford.”
WATCH | Suzanne Barr says pandemic has left diners in the mood to treat themselves:
Toronto-based restaurateur Suzanne Barr says she expects people will be more willing than usual to spend big while dining out after being cooped up at home for more than a year during the pandemic. 0:48
Only time will tell what diners do as they return to eating in restaurants for the first time in more than a year in many parts of Canada, but Pathania’s research offers some helpful advice for the millions of diners about to take the plunge.
“I have a rule of thumb: If you’re paying the bill and you think the cheapest is drinkable, go for the cheapest,” he said.
But given that high-end wines are often less marked up in percentage terms than the cheapest ones, “if there’s a wine you really like and you know your wine, then go for it.”
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
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