Devil's Advocate: A Defence of Restaurant Mark-Ups and ProWein Hotel Prices

Robert Joseph often likes to defend (or at least, explain) the apparently indefensible. Here, as thousands of professionals consider the high cost of attending ProWein, he offers a reasonable explanation for those high hotel prices.

Reading time: 2m 30s

Robert Joseph - with horns
Robert Joseph - with horns

If there is one thing on which almost all wine professionals agree – and there aren’t many – it is that restaurant mark-ups are too high, and that Dusseldorf hotels raise their prices abusively during ProWein.

Last night, after the final day of that event, as exhibitors and visitors headed home, I stayed in a very nice studio close to the centre of the city, for €70: a bargain.

The previous three nights, the daily rate for the same room would have been €300.

I discussed this difference in price with the manager.

We need moments like this, he said. Of course, it makes some people – the ones who have to stay in Dusseldorf at that time to attend the fair – very unhappy or angry, but the money we make then and at other similar times, including other exhibitions and Carnival, allows us to give everybody else a fairer price across the rest of the year. Is that so wrong?

Of course, he might – like Uber justifying its ‘surge charging’ – simply have directed me to Adam Smith’s laws of supply and demand.

Restaurant mark ups

But our brief chat made me stop and think about restaurant wine pricing, and a very similar conversation I had with a Parisian restaurateur many years ago.

We work very hard, he explained, to put together a set menu that is very attractively priced. Anyone who orders the house wine, doesn’t have to dig their hands very deeply into their pockets. But we also have to pay the rent, wages and for the heat and light, even before we buy any food. And the cheap set meals don’t bring in enough to cover those costs, let alone give us any profit, or get us through the nights or weeks when too many of the tables are unused.

That’s why we have to make our money on the wines, and the price we charge anyone who orders a salad or omelette from the menu, or the coffee or the bottle of mineral water.

It would be nice, he continued, as a wine lover, to put a more modest markup on the wines, but then I’d have to charge more for the food. Ultimately, the wine drinkers subsidise the food-eaters – or vice versa.

Of course, there will be those reading this who’ll point to restaurants they believe to be charging abusively high prices for their food and their wines. And those establishments deserve to - and often do - go bust.

Meeting a demand

But if, despite the choice on offer, they still manage to fill their tables at those prices, one could reasonably argue that maybe they’re not overcharging – at least not in the way Adam Smith would see it – any more than a Napa or Burgundy producer might be overcharging when they sell their bottles for $200 or $300. There is a demand, and they are supplying it, and the people who think these prices are too high are simply not their target customers.

Bluntly, there aren’t that many billionaire, or even multi-millionaire, hoteliers or restaurateurs or winemakers, and there are plenty in all three categories who struggle to make a good living, especially when bad weather or political events or pandemics add to their challenges.

None of this makes me feel happy to give a Dusseldorf hotelier or a Michelin-starred sommelier a large chunk of my cash, but it does make me pause to reflect before treating either as a money-grabbing villain.



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