The age-old theory that the second cheapest bottle of wine on the menu is actually the biggest rip off is actually a myth, according to a new study.
In efforts to avoid seeming cheap, diners frequently find themselves choosing the second bottle on the menu in restaurants, bars and pubs.
It’s a habit that critics argue restaurants are all too aware of – cashing in on it by placing the cheapest bottle in stock in second place, with the highest mark up.
However, a study by researchers at the London School of Economics found it's actually the middle of the wine list that's the most inflated in price, followed by those further down the menu.
It said customers should avoid choosing from the middle price range as these tend to have the heftiest mark-up compare to wholesale costs, the research found.
The research team compared the prices of 6,000 wines at 249 London-based restaurants and retail outlets.
Professor David de Meza, of LSE, said: "It has been a long-held assumption that the second-cheapest bottle on a restaurant wine list is priced with a greater mark-up to exploit naive diners embarrassed to choose the cheapest option.
"But if one gives this notion some thought, it begins to quickly fall apart.
"If the embarrassment theory is such common knowledge, one might well conclude that the second-cheapest wine becomes an even less attractive choice to diners than the cheapest since it is not only believed to be a bad buy but signals a pitiable effort to appear affluent.
"And even if diners do behave as naive behavioural types, it is not a given that all restaurateurs set out to exploit them.
"Our study challenges the notion and finds that the percentage mark-up on the second cheapest wine is significantly below that on the third, fourth, and fifth cheapest wine and well below the peak mark-up, which tends to occur around the median wine on the menu."
He said the study, published in the Daily Telegraph, found the price hike on the second cheapest wine was “well below the peak mark-up, which tends to occur around the median wine on the menu”.
The joint study with Sussex University also found the average charge for restaurant wines was more than three times that of retail prices.
The study found that the mean percentage mark-up of restaurant wines compared to retail prices was more than threefold – an increase that was similar for both red and white wines.
Professor Pathania, from the University of Sussex business school, said: "Having the highest percentage mark-ups on the middle wines can be logically explained. It would be reasonable to assume that at the low end of the wine, margins are kept down to encourage consumption.
"At the high end, low margins induce customers’ upgrading to the more expensive wines on the list.”
