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.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
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