[The Wall Street Journal]
* NY REGION
<http://online.wsj.com/public/search?article-doc-type=%7BNY+Region%7D&HE\
ADER_TEXT=ny+region>
* JANUARY 5, 2011
N.J. BYOB Gets Check
By LISA FLEISHER
<http://online.wsj.com/search/term.html?KEYWORDS=LISA+FLEISHER&bylinesea\
rch=true>
New Jersey's restrictive liquor-license laws have some owners of BYOB
restaurants looking for ways to uncork their profit potential.
Kitty Stillufsen wants to offer beer or wine with the scallops and
lobster at her small seafood restaurant at the tip of Point Pleasant
Beach. But state laws limiting the number of licenses based on a town's
population mean the licenses can cost hundreds of thousands of
dollarstoo expensive for owners of smaller restaurants such as Ms.
Stillufsen.
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[LIQUOR] Colin Archer/Agency New Jersey
Marilyn Schlossbach favors the idea of beer and wine licenses.
[LIQUOR] [LIQUOR] Related
* No License,
No Worry in Montclair, N.J.
When customers ask for a wine list, she said feels almost silly
presenting the options: Take a hike down the street to the liquor
store, or have a soda. Under state law, advertising BYOB outside the
restaurant is not allowed.
"I feel like we're a neutered business," she said.
New Jersey's liquor laws have had a dramatic impact on the state's
restaurant industry over the years, keeping chain restaurants at bay in
some areas and creating a hyperprotective class of license-holding
restaurateurs.
This has hardly led to an uproar from the public. New Jersey residents
have grown up with the law, which allows them to sip fine wine in BYOB
establishments for less than half the cost of what restaurants would
charge.
Sporadic attempts to change the law have largely withered on the vine.
Efforts in the early and late 1990s to create a beer and wine license
did not muster enough support to gain any traction. For the most part,
the only successful changes have been carve-outs for niche
industriesski lodges, hotels or major developments on public land.
Attempting to thwart mob control after Prohibition, New Jersey and many
other states segmented the industry into producers, wholesalers and
retailers, and placed limits on licenses. A state law passed in 1947
limited towns to one license for every 3,000 people but grandfathered in
existing licenses, instantly creating an unbalanced marketplace. Point
Pleasant Beach has 18 licenses for its 5,400 year-round residents, and
town clerk Maryann Ellsworth said she knows of four or five places that
would grab up licenses if they were available. Meanwhile, the
neighboring town, Point Pleasant, can't get rid of a license it is
trying to sell for $250,000 after a $100,000 discount; town officials
blame population density and a lack of parking.
During the past year, there has been an effort to undertake a thorough
review of the laws, and some want to open up the market. One state
senator introduced a package of bills with proposals to give
restaurants greater access to full or limited liquor licenses.
But the state's restaurant association will recommend against creating
a beer and wine license in what it calls its first comprehensive study
of the issue, due out Jan. 11.
The bills "caused quite a shudder in the industry," said Deborah
Dowdell, president of the state restaurant association. About 6,000 of
the state's 16,000 full-service restaurants have liquor licenses, she
said.
"The current system services the needs of our state and our citizens
and our business community," she said. "We would like to ensure that all
of those segments flourish without harming other segments of the
industry."
"Tinkering" with the system can have "drastic and devastating effects,"
Ms. Dowdell said, pointing to the carve-out for the newly invigorated
Xanadu mega-retail project at the Meadowlands. The association lost a
court fight in November to prevent future vendors there from buying
alcohol permits for $2,000, instead of the town's going rate of more
than $500,000.
Current license holders are fiercely opposed to adding licenses to the
market. Licenses are seen as property, bought and sold with the help of
brokers and lawyers.
"It's not fair to change the rules in the middle of the game," said
Mort Nase, who manages Frankie's Bar and Grill in Point Pleasant Beach.
"A lot of money was spent on these liquor licenses."
Marilyn Schlossbach, who owns a mini empire of restaurants along the
Jersey Shore, wants the state to create beer and wine licenses, despite
having liquor licenses in four of her six restaurants. She understands
why some liquor-license holders would be worried.
"It's just like if I bought a house three years ago, and now that house
might be worth a lot less because of the market," she said. "But
ultimately, if they're running good operations, people aren't going to
not go there because now some guy down the street has beer and wine."
License owners say people do not drink as much as they used toand
that beer and wine licenses would scrape nearly as much off the value of
their full licenses.
"The days of people going out and having three martinis or a couple of
scotches at lunch are over with," Mr. Nase said. "The best we can sell
at lunch is a beer or two."
State Sen. James Beach said he wanted his bills to spark conversation.
When a local grocery store proposed creating a religious license for
items such as Kosher wine, he started looking into the broader issues
around licenses.
"I've gotten both sides of the story," Mr. Beach said. "Some of the
BYOB restaurants are finding it much more difficult to keep their doors
open and with a limited license to serve wine and beer, to sell wine
and beer, they feel that this would help them to retain their
establishments."
Tim Delaney, a real-estate agent specializing in restaurants, said BYOB
restaurant owners who purchase liquor licenses aren't guaranteed
success.
"Many of those people have a very, very hard time, because their
customer base were people that didn't want to pay $8 for a glass of
wine, they wanted to bring in a $15 bottle," he said. "They end up
having to reinvent themselves. They think it's going to be an asset, but
a lot of times it's actually a deterrent."
Indeed, many BYOB owners said they're not interested in shelling out big
bucks for even a limited license.
"How many bottles of wine would you have to sell to get that money
back?" said Matthew Pierone, owner of Gourmet Cafe in Parsippany, a
40-seat Italian bistro.
Besides, the former executive chef said his dinner business was doing
well, perhaps because of the recession. "That's part of the appeal of
the place," he said. "A couple can come in, get a nice bottle of wine,
not overpay for it."
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