Dine: Do BYOB restaurants lose customers after getting a liquor license?


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A reader recently expressed frustration that once some of his favorite BYOB restaurants obtained liquor licenses, they often alienated bring-your-own fans in favor of customers willing to spend money on beer, wine and cocktails.

His email led me to wonder: Do restaurants lose customers when they secure a liquor license? It seems to be a case-by-case basis.

Many diners are disgruntled with corkage fees that rise from $3 to $20 and booze mark-ups three to four times more than liquor store prices. That means a bottle of wine that's $20 in a store can list for $60 to $80 on a menu.

This standard alcohol mark-up can support the overall expenses of the restaurant as well as the increased cost of securing a liquor license in Pennsylvania.

Justin Severino should know. The chef/owner of Cure in Lawrenceville secured a liquor license in May that cost more and took longer to get than he had expected.

"I didn't open with the intention of staying BYOB," said Mr. Severino, who opened his small restaurant in January 2012 and has gathered excellent reviews and national attention.

This process has become exorbitantly expensive. In 2011, the average price for securing a liquor license was $40,000. In 2012, it was more than $50,000. In 2013, it has soared to upward of $75,000 in Pittsburgh, said Mark Flaherty of Flaherty & O'Hara. His law firm represents restaurants and the hospitality industry around the country.

And Pittsburgh's not the most expensive place in the state to secure a liquor license. Mr. Flaherty cited the average cost in Butler County at $250,000 for state and lawyer fees. Further east in York County, it's $175,000.

The reason it's so high, he said, is not because grocery stores in Pennsylvania have recently gained the ability to secure licenses that allow them to sell beer and/or wine. "Today, the 181st grocery store got its liquor license," he said. "That's not a lot."

More likely it's because so many restaurants are opening in the region and so many licenses have moved out of the city to the suburbs and other developing areas.

"It's all about supply and demand," he said. "And liquor is where the profit is."

Once a restaurant gets a license, some BYOB fans say they stop going. These folks may be wary that booze will change an environment. Or they may be especially bothered by the corkage fee.

The corkage fee at Root 174 in Regent Square went from $5 to $20 a bottle after the restaurant started serving alcohol last year. Corkage at Cure is now $15, up from $3 for a bottle of wine or $3 per person for beer drinkers. In August, Cure charged corkage for 80-something bottles of wine.

"If corkage is allowed in restaurants they would do more business with wine drinkers," said the reader.

He cited his peer group that eats several courses, drinks wine by the glass and brings a bottle from a personal wine cellar. "If a restaurant isn't interested in that, then they are missing a big chunk of business."

Cure hasn't noticed a drop in sales.

"They are dramatically higher," Mr. Severino said about the sales. His regulars still come in with their own wines, "And they often bring fantastic bottles," much like the scenario the reader suggested.

Keith Fuller, owner of Root 174, said he did notice he lost regulars when he got his liquor license a year after opening in 2011. He said he wished BYOB fans would have continued to visit because he often waives the corkage fee for loyal customers, special occasions and esoteric wines. "It's a case-by-case basis," he said.

Despite the loss of some BYOB fans, Mr. Fuller said he sees more walk-in customers, citing himself among them at colleagues' restaurants on his days off.

"The thing about BYOB restaurants is that you have to plan," he said. "If someone wants a glass of wine or a cocktail after getting off work late, there isn't always the opportunity to stop and pick something up. Going somewhere that serves alcohol allows for more spontaneity for those who would like a drink with dinner."

While the number of covers or the price per check may rise, there are downsides for a restaurant with a liquor license. Mr. Fuller said that he's more accountable when a customer gets drunk. "Not to mention," he said, "my insurance has gone up."

To attract oenophiles, some restaurants that make the transition to liquor sales strive to order unusual bottles of wine. Mr. Fuller noted that his beverage director, Austin Smith, orders wine not sold at state-run stores.

"Our wine is all SLO," said Mr. Smith. A "Special Liquor Order" means that the wine purveyor sends cases a restaurant ordered within three to four days.

If a lay person were to order the same wine, it would take up to a month before he could pick it up at his local state-run store.

Although they're not fancy wines, those Mr. Smith cited were a Rhone blend, Domaine Le Garrigon, that runs $6 to $8 for a 7-ounce pour, as well as Hook & Ladder, a Gewurztraminer that costs $33 a bottle or $8 to $9 a glass. Neither is readily available at a state wine shop.

Some restaurants that have recently secured liquor licenses have never attracted wine drinkers. Take Mineo's, a pizza parlor in Squirrel Hill since 1958. The restaurant eased into serving beer and malt beverages when it secured a liquor license three years ago.

Though beer sales are brisk, Giovanni "John" Mineo Jr. said wine is another story. "I can't remember the last time I opened a bottle of wine here."

Mineo's, a stalwart in the neighborhood, is expanding into the space next door on Murray Avenue. When renovations are completed, expected by early November the restaurant will have a full bar. "I don't know that we'll even allow corkage," he said.

Fukuda in Bloomfield, a Japanese-style izakaya, has just begun the process of applying for a liquor license and is discussing how it will handle the transition.

Owner Hoon Kim says he anticipates a bump in business because his restaurant fills a very specific niche. "There really isn't a Japanese restaurant with a sake bar," said Mr. Kim. "There isn't a restaurant serving Japanese beer."

Right now, corkage is $2 per person.

Like many BYOB restaurants, on occasion, Fukuda pours gratis sake and beer, especially Fridays and Saturdays from 11 p.m. to 2 a.m. When he serves free booze to of-age customers, he said he does not notice that customers order more food. Nor are customers more generous when it comes to tipping, he said.

"I really haven't seen a difference."

dining

Melissa McCart: 412-263-1198 or on Twitter @melissamccart.


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