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Published:  18 January, 2007

In response to Joe Fattorinin's article, 'It's the economics ... stupid', Miles Corish considers the dynamics of restaurant mark-ups.

Joe Fattorini's article, 'It's the economics stupid', motivated me to respond. While the author makes a reasonable argument - linking Veblen's "conspicuous consumption" with potential purchasers of Chteau Ptrus - the section describing restaurant mark-ups smacked of naivety. As a wholesaler who supplies a variety of outlets, I feel qualified to comment. Fundamentally, it is in the interests of all for restaurants to use a graduated mark-up scale incorporating a good portion of "cash mark-ups". This is especially relevant for more expensive wines and engenders customer goodwill. The days when the high cost of "financing" vast quantities of expensive wines justified high percentage margins are largely gone. Most of my customers carry limited amounts of high-end wines. The assumption that it is in a restaurant's interest to adopt "high wine prices" to "discourage customers from drinking beyond their meal, so they finish in time for another party to eat" is questionable. Implicit in this suggestion is that high-priced wines are exclusively those working off percentage margins rather than expensive wines with sensible cash mark-ups applied. Are we really to believe that establishments adopting sensible cash mark-ups are going to have patrons chaining themselves to tables, preventing other customers from dining? Perhaps Joe's "economist" should examine further the dynamics of restaurant margins.

Miles Corish is managing director?of Bowland Forest Vintners