BOISE, Idaho —
This story originally appeared in the Idaho Press.
Arthur Berry & Company Associate Broker Brent Bungard sold a Boise liquor license this year for $300,000. Last year, Bungard’s liquor license sales were in the $200,000 range.
Bungard deals with seasoned licenses, or licenses that have to meet certain criteria over two years in order to be sold.
“Boise has had pretty substantial increases over the last year and a half, two years,” Bungard said. “There’s just no seasoned licenses available.”
Having a liquor license can help an entity, for example by bringing in revenue and increasing profit margins. However, for younger, less-established restaurateurs, the cost can be prohibitive — an issue the Legislature has tried to address several times. But for those who already have licenses, the idea of devaluing their investments is problematic.
“If you’re an independent operator, that’s going to be really hard for you,” said Dianne Jolovich, a hospitality management and culinary arts professor at the College of Southern Idaho. “That doesn’t count your building cost, your food cost, your employees, insurance, rent, any of that.”
But there are ways around the hurdle: For example, some chefs can partner up to open a restaurant, which can be more affordable, Jolovich said.
“A beer and wine license is just as good,” Jolovich said. “That’s just the way it is here in Idaho.”
The issue comes down to supply and demand, she said.
Gem State liquor licenses are apportioned by population. Each city gets at least two liquor licenses, and one additional license for every 1,500 people.
For example, the city of Boise has an estimated population of 243,570. That would mean Boise has an estimated 164 liquor licenses. Meridian, with an estimated population of 133,470, would have around 90 licenses.
The price of Meridian liquor licenses available through Arthur Berry & Company has varied from $45,000 to $65,000, since 2016, according to its listings site.
Expensive liquor licenses can have a dramatic effect on the food scene of a city. In Boston, where liquor licenses can run at least $400,000, the Boston Globe has reported, younger and less established restaurateurs sometimes skip town to places like Portland, Maine, which was named 2018 Restaurant City of the Year by Bon Appetit.
Other states have faced similar issues. New Jersey caps its liquor licenses at one per 3,000 residents for each town, making its dining scene “diseased,” one Rutgers professor told a local news site. A Cheesecake Factory in the Garden State once paid $2.3 million for its liquor license, an example of how more established businesses with deeper pockets can have an advantage.
The food scene is growing in Idaho, and many young entrepreneurs are coming in, Jolovich said.
Recently, the magazine Food & Wine named Boise one of America’s “Next Great Food Cities.”
Plenty of entrepreneurs in the Treasure Valley don’t have the capital to pay hundreds of thousands for a seasoned liquor license. They instead turn to the waitlist, where the actual fee is around $750 for a new license.
Different cities in the Treasure Valley are facing different situations when it comes to liquor license waitlists. In Boise, the waitlist was five-to-eight years as of 2018, according to Boise State Public Radio. The Boise secondary liquor license market is so hot because of the length of the waitlist, said Meridian restaurateur Brian Tsai.
“You have no choice but to buy one off the secondary market,” he said.
But in Meridian, Tsai said, he had his name get to the top of the list more than once. Tsai, who is hoping to open his restaurant The Dalton Royal this year, attributes this to Meridian’s growth.
The past two summers, Tsai was in a position to get a liquor license. However, there’s a certain time frame in which one must begin using the license.
“They can never say for certain whether you’ll get one that summer or not,” Tsai said. “They can only tell you your position on the list. So essentially, if you’re opening a business, you have essentially literally millions of dollars on the line and they’re saying well you might get a license this summer.”
However, Tsai was not yet ready to open the past two years. His name was recycled to the bottom of the list and this year, he should get one.
“One, it’s very convoluted. Two, it’s very difficult to time … I’m one person doing this,” Tsai said. “(A chain) could just come in and they finish their plans and they can just pay it, reserve that license and open up.”
People who already have licenses usually fight efforts to remove or increase quotas, Slate Magazine reported. The reason is two-fold: More licenses means more competitions and more supply decreases the value of the licenses already out there.
It’s like the Treasure Valley housing market where there’s a barrier between the haves and the have-nots. A liquor license can be a valuable asset for those who can land one.
However, for people like Ryan Haworth of Teton Thai in Driggs, the license can be elusive. Haworth testified to the legislature in support of a proposed reform bill and said he had not been able to get a liquor license for a decade.
In 2019, various stakeholders testified against another reform bill.
One, Boise business owner, Brad Selvig, wrote to the Senate State Affairs Committee that he paid $150,000 for his license in 2007. He said flooding the market with licenses would cause his investment to be devalued.
“What I know is that I do everything I can to protect this investment,” Selvig wrote to the Legislature.
For restaurateur Boomer Godsill, there has to be a solution where all stakeholders are heard from, including the government, small business owners who can’t get into the market and entrepreneurs who don’t want to lose money they’ve invested.
For example, he mentioned having licenses for different classes of businesses, like a sports bar versus a restaurant.
Godsill is the owner of Treasure Valley restaurants Biscuit & Hogs, the Huck House and Blue Bench brunchettes, and the Original Sunrise Cafe. He also is the owner of a soon-to-be-opened brunchette in McCall.
The brunchettes have beer and wine licenses, but the others have liquor licenses.
He purchased from the secondary market. The waitlist is not feasible unless someone is planning their restaurant or bar years in advance, Godsill said.
“It wasn’t too bad, honestly, other than obviously, the price of the liquor licenses,” Godsill said. “I may have lucked out when I was looking to have some available for purchase.”
For the brunchettes, Godsill said he would love to have a liquor license, but it’s not feasible to spend at least $100,000 for a restaurant that’s only open 7 a.m. to 2 p.m. just to serve vodka in bloody marys.
Liquor licenses can help a business, he added.
“Liquor has very good margins,” Godsill said. “You sell one vodka soda … well, costing you $7 a bottle, you basically have to sell two shots to purchase that bottle. Everything else on top of that is all profit. Beverages in general have a higher markup.”
In the meantime, help may not be on the way for cash-strapped entrepreneurs.
“With the supply as tight as it is right now, I don’t see them going down,” Bungard, the broker said. “Unless there’s a difference in supply and demand, they’re going to stay at that level.”
This story originally appeared in the Idaho Press. Read more at IdahoPress.com
Watch more Local News:
See the latest news from around the Treasure Valley and the Gem State in our YouTube playlist:
