I'm afraid that your calculations on both Dave's income and the restaurant's income are highly suspect, above and beyond the issues Dave raised in his diary. OK, so he doesn't have to buy the grapes on the market, but he did need to buy the land. Unless he had a big pile of money starting out, that tends to imply a mortgage that needs servicing.
You refer to Dave wanting to take out living expenses ... well, I can't see taking out personal expenses, but how about the expenses of paying for Brendan and all the people who tend and pick the grapes? In fact, wasn't it just the last year or two that Dave commented on having made a profit for the first time? Since this was in the context of a reference to taxes, this doesn't necessarily correspond to cash flow, but he certainly doesn't get to write off personal expenses in getting to this figure.
Likewise for the restaurant. The point about the contrast between pricing of wine and of coffee is a good one, but figuring out the profitability of food versus wine involves a lot more issues than you raise. Not that I am privy to any specific examples, but I really have to question drawing any conclusions from figures that are that questionable.... not to mention that I am sure that there are a lot of restaurateurs who don't have a good handle on it (there is one local place where I know personally they have only recently gotten any clue because of the input of the boyfriend of one of the owners). That wine is a high profit item in many restaurants is clear. What is not clear is whether they could realize that same profit in other ways and lower the price of the wine.
For example, lets take the case of a couple out for dinner paying $30 each for the food and $30 for the wine for a total bill of $90. And, just for discussion, let's suppose that there is $10 each in actual cost of the food and $10 in the cost of the wine or $30 so the gross profit on this meal is $60. And, just for the sake of argument, let's suppose that the cost of the building, waiters, chefs, utilities, etc. works out to $40 on this meal so that the net profit is $20.
Now the first really important thing to notice is that $40. This $40 is made up of costs that are there whether or not the meal is served at all, i.e., something like $4,000 a week in costs divided by an average of 100 meals. If the restaurant does something that bumps up the number of meals per week to say 140 per week. Now the cost per meal has dropped to $28.57 providing another $11.42 in profit per meal. Not quite that simple, of course, because that large an increase might require more waiters, for example, but one can see right there that one has the potential to lower the wine price by $10 and come out ahead... and lowering that price could be one of the ways to attract those extra meals.
Likewise, increasing the food price by $5 per dinner, say $1 each on the appetizer and dessert and $3 on the entree. Again, the wine price can come down by $10 on the shared bottle and the total price paid by the dinners is the same. Would that drive away business? Maybe, but certainly not in a simple and absolute way that means one couldn't consider it.
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Restaurant Wine Pricing
Mark Brown, April 2, 2001
Re: Restaurant Wine Pricing
Ed Hale, April 3, 2001Re: Restaurant Wine Pricing
A. Simpcox, April 3, 2001Re: Restaurant Wine Pricing
Thomas Mercer-Hursh, April 7, 2001
Re: Restaurant Wine Pricing
Ed Hale, April 4, 2001
Re: Restaurant Wine Pricing
A. Simpcox, April 3, 2001
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Ed Hale, April 7, 2001Re: Restaurant Wine Pricing
A. Simpcox, April 7, 2001
Re: Restaurant Wine Pricing
Ed Hale, April 9, 2001
Re: Restaurant Wine Pricing
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