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Optimal Wine Pricing for Restaurants*

Published online by Cambridge University Press:  15 September 2015

Guillaume Coqueret
Guillaume Coqueret*
Affiliation:
Montpellier Business School, 2300 Avenue des Moulins, 34080 Montpellier, France; e-mail: g.coqueret@montpellier-bs.com.
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Abstract

We present a simple static way of optimizing the prices of bottles of wine for restaurants with a given cellar. In contrast to classical assortment pricing models, we posit that the cellar (i.e., inventory) is given and is not taken as a variable entering the optimization program. In our model, the optimal price is driven mainly by a rating parameter after the effect of initial cost is removed. This parameter plays the role of a dominant characteristic in hedonic models, even though the levels of stocks may also be determinant when they are very low. We provide a numerical sensitivity analysis of prices to various parameters and study a realistic large-scale example based on two wine lists with 50 bottles each. Finally, several extensions are discussed. (JEL Classifications: C61, L11, L83)

Keywords

assortment pricinghedonic modelswine list
Type
Articles
Information
Journal of Wine Economics , Volume 10 , Issue 2 , November 2015 , pp. 204 - 224
Copyright
Copyright © American Association of Wine Economists 2015 

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Footnotes

*

We are indebted to an anonymous referee for his/her numerous comments, which have lead to a considerable improvement of the practical facets of this paper (notably the analyses in Section IV).

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