Ask George: Why don’t restaurants reduce prices on high‑margin items like alcohol to see if increased traffic would boost the bottom line?

Here’s the scenario: Restaurant guests are increasingly frustrated with what they see as inflated prices on high-markup items, especially alcohol and wine. Many feel that restaurants are charging more simply because competitors are doing the same, not because the pricing is justified.

With $16 cocktails and $18 glasses of wine now common, I’m hearing the same question more often: Why not lower prices on these high-margin items? The argument is that reduced pricing would drive higher sales and attract more customers, ultimately offsetting the lower margins and improving overall profitability. It’s the classic “fast nickel vs. slow dime” philosophy, paired with another industry belief that “volume cures all ills.”

I understand the logic. I’ve seen it work. Under the right conditions (including keeping other costs in line), it can be effective. So why don’t more restaurateurs embrace a volume-driven approach? We asked a few to weigh in.

Frank Romano, The Parkmoor Drive-In, Madrina: “This is probably the hardest question you have ever asked! I’ve tinkered with this for at least 20 years. The formula isn’t a secret. We’ve tried the reduced prices for food. In the past, we did three courses for $35 [at American Place] for Restaurant Week. We did the same thing [at Araka and Miso] when we brought Restaurant Week to Clayton. The restaurants saw an uptick in volume. Quite a bit to tell you the truth. Both times, we tried to continue the three-course deal at the lower price after the initial offering, but the interest died off, and we went back to business as usual. I think the key is to run limited time offers. We are seeing great success with giving people a taste of the good life at very reasonable, reduced prices on wine, beer, cocktails, and food at Madrina. Every day, people are waiting to get a table or a bar seat as soon as we open. The Aperitivo Hour (happy hour) runs from 4–6 p.m. This adds great traffic before dinner reservations start rolling in at 5 p.m. I can go on and on about theories, but to answer the question: Does volume cover all ills? Yes, if you can bring the volume of traffic in from open to close, even if you give up some of the margin at certain points, operational efficiency will be greatly increased. I’m not sure about your bank, but mine doesn’t take percentage points. They only accept money.”

Natasha Kwan, Frida’s, Diego’s Cantina, Station No. 3, Bonito Bar: “Discounts or lower prices can work for some restaurants and not for others. If your main demographic already pays top dollar for food and drinks, then they may not be interested in a discount, while more casual concepts often have guests looking for value. We’ve experimented with happy hours and lower-priced items, but volume doesn’t always offset the additional labor and cost of high-quality ingredients. A lot of it comes down to how guests perceive the restaurant’s brand. If they understand the quality and integrity behind the food, in addition to the experience, they’re willing to pay for it.”

Chris LaRocca, Crushed Red: “Since I feel we’re at the point where customers simply won’t pay any more, I’ve not raised prices at Crushed Red in 15 months. We’ve taken the hit, hoping it will drive traffic for the customer who sees the value there. Traffic is still weaker than I would like it to be, but my plan is to continue that policy for at least the next six months or as long as we possibly can. We’ll soon roll out another value-added initiative that we feel will generate renewed interest in what we do. To your point, you’d have to be aggressive in your discounting to make an eyebrow-raising difference and you’d have to build that awareness. If you think about it, it’s the essence of happy hour, but now it’s all night long.”

Brant Baldanza, OG Hospitality Group: “We have been doing this to a degree for several years at Shack and Corner Pub with several different cocktails, specifically our Codigo crafted cocktails, where the price should be $2–$4 more than what we currently charge, and those cocktails are top sellers. An across-the-board strategy like you propose may have been more sustainable pre-2020, but now, with ridiculously higher costs—for everything—the juice simply is not worth the squeeze. But if any restaurant wants to give it a shot, count me in for an Eagle Rare with a big cube for $8.”

Mark Hinkle, OO Hospitality: “I think developing a thoughtful pricing strategy is a big part of building a sustainable restaurant. Our goal is to offer value at any price point. Staying competitive, on everything from happy hour to cowboy steaks for two, helps drive volume. I do have to mention that “higher-margin items like alcohol” doesn’t apply to our restaurants. When you offer a premium beverage program, you don’t have those old-school money makers in your well, and you have to approach pricing wine and spirits more like you do food. We want to put the best product in your glass, so we buy the best and mark it up less.”

Jason Arnold, Hamilton Hospitality: “Our restaurants want to be a place that the neighborhood can come to dine frequently and not just on special occasions, so we are very conscious that we need to maintain competitive prices, not just with our neighborhood but with other options in the city. Our restaurants also want to be busy and fill our seats, but don’t want to be two-deep-at-the-bar-with-a-line-at-the-door busy, or it negatively affects the guest experience. Demand pricing is a topic that has come up in the last couple years, but the reality is that happy hours have been around since the beginning of time, and in essence that’s what restaurants do: They incentivize people to come in and drink and dine during off-peak times. You expect to pay more for a glass of wine at 7 p.m. on Saturday night versus 4 p.m. on Tuesday, when they can be half-price.”

Ben Hillman, Hi-Pointe Drive-In, Taco Buddha: “You’re right that volume cures a lot of ills. But when you actually run the scenarios, the lift you’d need to offset a meaningful price reduction is steeper than most people assume. At Taco Buddha and Hi-Pointe, we made a deliberate decision to hold prices flat for over two years, even as input costs climbed more than 10 percent. That’s a real investment in the guest relationship, and one we felt strongly about even when it hurt. The bigger risk with aggressive discounting isn’t whether it drives traffic…it probably does, short-term. The risk is what it signals over time. Price becomes the reason guests come, and then price becomes the reason they leave when someone undercuts you. Can high prices reduce foot traffic? Sure, if the value isn’t there to back them up. But the answer to that isn’t lower prices, it’s making sure every visit justifies what’s on the menu.”

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