Optimal Wine Pricing for Restaurants

Guillaume Coqueret ()
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Guillaume Coqueret: Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School

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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.

Keywords: assortment pricing; hedonic models; wine list (search for similar items in EconPapers)
Date: 2015-11-01
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Published in Journal of Wine Economics, 2015, 10 (2), 204-224 p. ⟨10.1017/jwe.2015.19⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02312229

DOI: 10.1017/jwe.2015.19

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