Liquor Laws are Utah’s Achilles’ Heel
On one hand, Utah presents like the proverbial promise land for enterprising restaurant operations. Surging population figures, a deep labor force, and the National Restaurant Association’s forecast of a 4.1 percent increase in restaurant sales this year warrant quite a buzz for expansion into The Beehive State. However, restaurants that rely on alcohol sales have felt the sting of Utah’s restrictive laws and many have refrained from opening locations in Utah because of the state’s onerous processes for obtaining liquor licenses.
Utah’s Senator John Valentine thinks he has the answer that will invite restaurant expansion into his state. Last November, he drafted a bill calling for a master liquor license where multi-unit operators could apply for one license to cover all of their establishments rather than needing a license for each individual restaurant. Valentine contends this would free up Utah’s existing licenses for other operators and offer predictability for expansion-minded restaurateurs.
Though Utah prides itself on being business friendly—as evidenced by its three-year run atop Forbes “Best States for Business” list—national concepts like Buffalo Wild Wings and LongHorn Steakhouse did not open outlets in the state until last year, in part due to the state’s antiquated liquor licensing system.
“Everything’s great about Utah until you say you want a liquor license,” says longtime Utah restaurateur Hersh Ipaktchian, who owns 11 alcohol-serving restaurants in the state.
In developing his hallmark concept—Iggy’s Sports Grill—Ipaktchian was often forced to slow expansion plans until he could obtain a liquor license. The availability of Utah’s licenses has long been tied to population figures, which meant Ipaktchian frequently found himself waiting either for a licensed eatery to close or for the state’s population to grow to merely have a shot at securing a license.
“It’s been difficult over the years to get license and development plans synchronized,” Ipaktchian acknowledges.
In March 2012, a Buffalo Wild Wings attorney told Utah liquor commissioners that the chain would have to delay construction on its second Utah location if the restaurant could not serve liquor. The attorney added that the chain had hoped to open 10–12 restaurants in Utah, but those plans would be threatened without a liquor license. By the end of 2012, Buffalo Wild Wings had only four locations in Utah.
For others, Utah’s licensing laws fully squelched development plans.
“When licenses weren’t available in Utah, we simply chose not to open any more units in the state,” says Will Miller, co-owner of Wing Nutz, a Utah-based chain with 14 locations in its home state.
While the proposed master license—and its assurance that future units would be covered—is appealing, some operators also want to know about costs and, in particular, violations. As currently written, the bill only allows for two violations per license, which could potentially put multi-unit master license holders in a pinch.
“I’m torn,” Miller says. “A master license opens up the ability for growth, but we need to see the legislature address the issue of violations. As [the bill] stands now, we couldn’t put our entire system at risk based on [a potential violation by] one management team or even one server.”
Senator Valentine told FSR that the bill would be presented publicly during his state’s Senate session that began January 28th. The state Senate and House have until March 14th to reach agreement and submit the bill to the governor for approval.