Drink tax hasn't lost bitter taste, owners say

Allegheny County Councilman John DeFazio is buying.

Standing at the bar in Mitchell's Restaurant, Downtown, Mr. DeFazio is debating the controversial new 10 percent drink tax with Jim Mitchell, the owner of the restaurant, and John Petrolias, the owner of the Smithfield Cafe a few blocks away.

Mr. Mitchell and Mr. Petrolias are friends of Mr. DeFazio's, but they're afraid their livelihoods will be directly hit by the new tax.

As the discussion starts, the first round of drinks is served. Mr. DeFazio, who voted for the levy, picks up the tab, paying $13.39 for the beverages -- a couple of other customers are included in the purchase -- and $1.36 for the drink tax. The Diet Coke he gets himself is free, and he tips the barmaid $3.

PG audio: Drink tax debate
Allegheny County Councilman John DeFazio discusses the new 10 percent drink tax with Jim Mitchell, owner of Mitchell's Restaurant, and John Petrolias, owner of the Smithfield Cafe, at Mitchell's.

"I know it hits these people hard. I understand that," Mr. DeFazio said. "But our other option was raising property taxes, which no one wants to do. The only other thing you could do was lay off more people in the county, and we already did that."

Mitchell's isn't the only place where voices are being raised against the drink tax, which went into effect Jan. 1. All across Allegheny County, restaurant owners, bartenders, waitresses and customers are finding it hard to swallow.

"It's just another blow to trying to stay lively and keep a business as an independent operator here in Pittsburgh," said Antoinette Cardamone, operating owner of Cafe Allegro on South 12th Street on the South Side. "It's one more thing to keep people from going out to eat."

Many establishments have dealt with the tax by raising drink prices 10 percent across the board. Others list the drink tax separately on the customer's bar tab.

"We're not, by any means, standing to make a profit," said Kevin Salmen, general manager of Diesel Club Lounge on Carson Street on the South Side. "We're just looking to cover the tax. With the volume of business we do, we would take a hit like thousands and thousands of dollars."

Mr. DeFazio, a Democrat from Shaler, told Mr. Mitchell and Mr. Petrolias that the county would try to get bar owners a bigger discount on volume liquor they buy from the state.

"Johnny, that's a drop in the bucket," Mr. Petrolias said. "That's not a solution, John."

"But it's a help," Mr. DeFazio countered.

"How does it help the customer?"

"You get this money, you use it to help the customer," Mr. DeFazio responded.

"It's not that much," Mr. Petrolias said. "I'm going to donate it to the guy who runs against Dan Onorato, that's what I'm going to do with it."

Adjusting prices

Ian Miller, a manager at Brillo Box on Penn Avenue in Bloomfield, said the base prices of drinks there have been adjusted "so that when the added tax comes, you don't have to deal with pennies."

"We didn't raise the prices, the county did," he said.

In fact, Mr. Miller said, Brillo Box's owners lowered the price of a beer bought during "happy hour" so that a $2 bottle of beer still costs $2 -- only now the tax is included.

Jeff Walewski, owner of the Sharp Edge restaurants, with three locations in Allegheny County, decided that it was only fair to split the tax hike with his customers.

"I said, 'This is a rip-off for everybody,' and I tried to make it a little easier for everybody," said Mr. Walewski, who reduced his prices by 5 percent, then added 10 percent to cover the tax. "The biggest response is, 'That's really nice of you guys to take half of the hit.' That seems to be the theme."

Several owners believe the ramifications of the tax weren't thoroughly thought out by the county officials who supported it. It isn't just the cost of the drink, Mr. Walewski said, but the cost of printing up new menus and the impact on the servers' tips. There's also the loss of business as customers cut back on their evenings out.

"Business at one of our restaurants already is off 15 percent, and workers have said their tips are down," Mr. Walewski said. "It's still a little hard to tell [how bad it will be]. We won't know for three or four months."

For the time being, LeMont restaurant on Grandview Avenue on Mount Washington is paying most of the tax costs itself. The restaurant's owners also have purchased ads decrying the tax.

"We're running a promotion now where, if you book a banquet before March 31, LeMont will absorb the 10 percent," said Alex Colaizzi, general manager of LeMont. "We're hoping it will generate some business."

Tips down

At S Bar on Carson Street, the owners increased the drink prices and, when the price was awkward, rounded up. Carol Chartier, a bartender there, said the customers have noticed, but they're still coming in.

"People that drink, drink," she said. "They complain a little more, and maybe tip a little less. We look at our tips at the end of the night, and I noticed that this past Saturday we made 17 percent instead of 20 percent. I don't know exactly what the reason was, but we definitely noticed it."

Krista Rowland, a bartender at Casey's Draft House on the South Side, said her bar has been hit harder because so many of the customers there are college kids on tighter budgets.

"They're looking for beer specials and they're not going to go to the MAC machines to get more money just to cover the tips," she said. "I live on my tips. At the end of the night, I've got a cup full of quarters. I can't pay my mortgage with quarters."

Casey's, like many establishments, is making certain that customers know who is to blame for the higher costs. Fliers taped up in many bar windows show Mr. Onorato and the County Council members who voted for the tax. The fliers also inform the individuals pictured that they should not expect to be served, should they come in.

A number of bars and restaurants are using the register receipts to point the finger. At Smithfield Cafe, for example, at the bottom of the printed receipts, just below the words "Thank You," it reads, "The 10% liquor tax is from Dan Onorato. Don't forget that on Election Day in 2010."

Casey's also is selling T-shirts that express in clear and vulgar terms what the management thinks of the tax.

"They're selling pretty good," Ms. Rowland said. "The bartenders don't get a cut of the T-shirts. But it's a good show of support for us."

Will drinkers unite?

Back at Mitchell's, the discussion continued.

"John, I'll tell you, you've created a groundswell," Mr. Mitchell, a lifelong Democrat, said to Mr. DeFazio. "You really hit a nerve with this drink tax. I've heard real die-hard Democrats saying they're going to really look at who they're voting for. Some heads are gonna roll."

"If you guys work as hard helping us as you are fighting us, maybe we could solve these problems," Mr. DeFazio said. "It don't bother me, but they got these signs with our pictures saying, 'You're not welcome here ...'

"I'd like to make everybody happy," Mr. DeFazio said. "But you can't."

"You want to make everybody happy? Lower taxes. Less government," said Mr. Petrolias, a Republican committeeman. "Government can't be trying to solve everybody's problems."

"If the money was there, we'd do it," Mr. DeFazio said. "We'd cut taxes and we'd be heroes. But we're struggling with money right now."

"You want to talk about struggling with money?" Mr. Petrolias responded. "Get in the restaurant business."

Staff writers Amy Schaarsmith and China Millman contributed to this report. Dan Majors can be reached at dmajors@post-gazette.com or 412-263-1456. First Published January 20, 2008 5:00 AM


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