thinkstock
As many successful restaurants are proving, operators don’t necessarily need a liquor license to survive anymore.

Is There Life After a Liquor License?

Underline Image
By Daniel P. Smith September 2016 Bar Management

Two years ago, Chef Andrew Kochan reached a crossroads.

Along with his Marigold Kitchen colleague, Chef Tim Lanza, Kochan had the opportunity to purchase the 70-year-old Philadelphia establishment. 

In itself, that was a simple decision.

The Marigold Kitchen had emerged as a culinary treasure in the City of Brotherly Love, termed a “venerable dining room” by Zagat, and boasted a reputation few available-for-purchase restaurants could ever match.

There was, however, one hang-up: The upscale restaurant did not have a liquor license. 

“We could afford the business or the liquor license, but not both,” Kochan recalls.

While many full-service restaurateurs would rather quash a prospective deal than live without a liquor license, operating as a BYOB (bring your own bottle) restaurant need not be the death sentence so many perceive. 

In fact, highly regarded BYOB restaurants exist—and, in fact, thrive—in cities across the country. Chicago, for instance, hosts acclaimed spots like Ruxbin and goosefoot, while New York is peppered with BYOB stops ranging from casual ethnic restaurants to intimate neighborhood eateries.

For Kochan and Lanza, BYOB was their reality, and they were determined to make it work.

This is not to suggest, however, that the duo did not want a liquor license. A year after taking ownership, Kochan and Lanza explored obtaining a liquor license, eager to offer diners a more well-rounded culinary experience and capture the heightened profit margin liquor sales deliver.

But that effort quickly hit an unexpected roadblock. 

The historic Victorian townhouse that housed Marigold Kitchen exempted the restaurant from certain legislation. If Kochan and Lanza secured a liquor license, their “grandfather status” would evaporate, forcing a litany of capital improvements around issues such as ADA accessibility and multiple points of egress. 

“So we wouldn’t just be paying about $150,000 for the liquor license, but about $400,000 to get the space up to code as well,” Kochan says.

With that cost too much to bear and a liquor license off the table, the Marigold Kitchen partners had but one choice: to double down on life as a BYOB establishment. 

When diners now call to make reservations, Marigold Kitchen staff recommend wines that will not only complement the night’s 14- to 17-course tasting menu, but also spotlight specific varieties available for sale in Pennsylvania, a state with some strict liquor guidelines. A server who doubles as a sommelier, meanwhile, suggests compelling pairings for on-site diners. 

Jay Wiley

Marigold Kitchen also discovered a loophole that allowed staff to provide complimentary beverages to guests. The restaurant has Champagne at the ready for diners celebrating anniversaries or birthdays and will supply mid-grade wines to diners who come empty-handed.

It’s not ideal, Kochan admits, but the solutions have helped Marigold Kitchen maintain its status as a top Philadelphia restaurant, ensuring earnest hospitality trumps any customer frustration or disappointment. 

“I would much rather have a liquor license than not,” Kochan says, “but we do what we can otherwise.”

A similar can-do spirit also propelled the owners of goosefoot, the Michelin-starred Chicago restaurant, to open goosefoot food & wine in an adjacent space. The boutique shop offers a diverse array of wines diners can purchase and then bring to their dinner table at the restaurant.

In Houston, BYOB has become a part of the branding—and allure—of Just Dinner on Dunlavy, an upscale eatery housed inside a historic bungalow in the city’s eclectic Montrose neighborhood. When veteran restaurateur Andrew Rebori first opened Just Dinner in 2007, he rejected a liquor license. There was the practical matter of the bungalow’s tight quarters, but also a conscious desire to avoid the inevitable paperwork and oversight that comes with liquor sales. 

“He wanted something quiet and easy,” current Just Dinner owner Lila Rivas says of the late Rebori.

Since taking over in 2011, Rivas says she has consistently debated pursuing a liquor license. Though the cost—about $7,000—is rather modest compared with what other restaurants might face, she has yet to move forward.

“It is something I play with every year,” Rivas acknowledges, “but we’ve become known as Houston’s most romantic BYOB and the BYOB angle is a part of our brand.” Rivas says guests are often grateful they can bring in their own selections and she frequently encounters diners who enjoy sharing bottles with sentimental stories—a 1964 vintage or wine procured during a honeymoon in Rome—at her tables.

“I love hearing these stories and it actually becomes a fantastic connection point with our guests,” she says, noting that guests rarely blink at the $12 per bottle corkage fee.

Kochan, too, says it’s interesting to see the bottles guests bring in, an element only possible at a BYOB establishment. He’s had guests arrive with rare $1,000 bottles from their private cellars to one group that “opened up a bottle of tequila.” And being a BYOB, Rivas adds, sparks something else: a feisty focus on delivering impeccable food and service that some liquor-peddling restaurants—even high-end ones—sometimes take for granted.

One Operator’s Liquor License Tale

As C.J. Reycraft Jr. and his partners prepared to open Amuse in Westfield, New Jersey, in late 2013, they analyzed two carefully crafted business plans for their upscale, 50-seat French bistro: one with a liquor license and one without. 

Manny Carabel

Rather than electing to invest about $400,000 into a liquor license—the market rate for a Westfield permit, Reycraft and his team elected to put that money into the restaurant space and open as a BYOB establishment.

“We thought we’d put money aside to buy a liquor license down the road,” Reycraft says.

That plan, however, met unforeseen challenges.

In New Jersey, where liquor licenses are tied to population, Westfield faced a short supply of available licenses. Reycraft and his colleagues anticipated a liquor license running about $400,000, but the market rate more than doubled in two years. 

So despite rave reviews for Amuse, leadership made a bold move this past summer: They closed the restaurant and converted their Westfield space into a fast-casual burger spot called Butcher Block Burgers, a concept they believe can capture the volume necessary to offset the area’s high rents and the lack of a liquor license.

“I truly like the concept of Amuse, but this just wasn’t the right location and the inability to get a liquor license is a big part of that,” Reycraft says.

This story originally appeared in FSR's September 2016 issue with the title "Life After a Liquor License."