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Which bottle of wine at a restaurant has the biggest markup? The answer may surprise you – CBC.ca

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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.”

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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