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joechartreuse

Non-monetized Liquor Licenses?

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Though not a restaurateur, I have have been associated with the business most of my adult life. Bartender, manager entertainment, part owner, and way back when- a provisions broker.

I have owned a few successful businesses besides as well. The one firm rule that I have always followed is "If an asset isn't monetized, it's not an asset."

All of that being said, I am hoping for a bit of an education from those in the know.

We all know that full liquor licenses can be extremely expensive here in NJ. An investment of this sort would seem to need some justification. Of course I have seen and actually participated in the saving of restaurants on a shaky start by these licenses.

A full license can be a huge second income ( or even first, considering that the profit margins on liquor are so much higher than food) for a restaurant.

OK, my question: I have seen a disturbing trend wherein restaurants with full bars are closing at the end of service. This is not a decision based on town regulation. None of them require a ten o'clock closing.

This would seem to be extremely counter-productive as not only are they taking much longer to hit a break-even point, in some cases said license is running at a constant loss to the restaurant.

Why- with proper marketing- would anyone take a pass on several hours of high profit sales? I have seen several of these places fold - in my opinion, just because of this.

What am I missing here? I truly cannot come up with a logical answer. Help?

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Are there enough customers to support a bar scene? You still have to pay a couple bartenders, electricity, etc.

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Are there enough customers to support a bar scene? You still have to pay a couple bartenders, electricity, etc.

 

There are always plenty of customers out there. If marketed properly, they come in and spend. As I stated, it's a matter of letting people know that you are open, and giving them a reason to come in.

 

One owner of a newly defunct restaurant told me that "This town rolls up it's sidewalks at 9". I grew up nearby and knew that this was not so. The town had no other full bar open late, so they just didn't get have a reason to stay in town for cocktails and went elsewhere.

 

Having grown up in the area I know many of the residents and often see them out late at other venues ( Remember, I work in multiple venues on various nights) - they DO want to go out after dinner.

 

This place had a nice atmosphere, decent food, and a great location. One of the nicest bars that no one had ever heard of.

 

I would add that the previous restaurant at that location did the same thing and failed as well. The one before THAT stayed open and was successful until they sold it.

 

I simply can't find a logical answer for spending thousands upon thousands of dollars for the license and not using it for the income that it could generate.

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So, buy a license and monetize it!

This thread wasn't about me. It is about owners with what seems to me a lack of business sense. That is why I was asking in the first place.

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So, buy a license and monetize it!

This thread wasn't about me. It is about owners with what seems to me a lack of business sense. That is why I was asking in the first place.

 

 

I understood what you were saying, just that as already mentioned, when you consider the fixed costs, additional risk (most sting operations, drunken folks, theft, etc. happen later in the evening) you end up needing a lot of customers... And then a cold, snowy night or in the case of this winter, a cold, snowy month, can be very expensive.

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So, buy a license and monetize it!

This thread wasn't about me. It is about owners with what seems to me a lack of business sense. That is why I was asking in the first place.

 

 

I understood what you were saying, just that as already mentioned, when you consider the fixed costs, additional risk (most sting operations, drunken folks, theft, etc. happen later in the evening) you end up needing a lot of customers... And then a cold, snowy night or in the case of this winter, a cold, snowy month, can be very expensive.

 

 

 

 

So better to lose tens of thousands of dollars that to take a little time to market the place and give a reason for people to show up? You know- SELL the product? Yes, there will always be off nights, but NO effort is a guaranteed loss. Is it ego? " My wonderful food will bring them in droves, who need more income"

 

As for: " additional risk (most sting operations, drunken folks, theft, etc. happen later in the evening", well yes, if run like a dive. The nicer the place, the better the clientele in most cases.

 

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No, the operational risk, additional costs, and staffing issues just make for a pretty high hurdle, nothing more to it. This isn't a trend unique to NJ - restaurants and bars are closing earlier, or not remaining open for additional bar income in many major cities for similar reasons.

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No, the operational risk, additional costs, and staffing issues just make for a pretty high hurdle, nothing more to it. This isn't a trend unique to NJ - restaurants and bars are closing earlier, or not remaining open for additional bar income in many major cities for similar reasons.

Yup, and - at least in my area- restaurants a closing and changing hands at high speed because of it. Again, this area is not offering licenses for 10K, but 100K and over. If that sort of money is to be spent, it must be utilized

 

If it were such a high hurdle the regular bars would have the same turnover rate. They don't- not even close.

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right, but that's just saying the licenses are overpriced, because their isn't enough cashflow even if you were open the maximum hour of numbers. The point is that running a bar inside of a suburban restaurant from 10-2 doesn't generate enough revenue to justify the marginal costs, never mind amortize the fixed costs of the licenses.

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right, but that's just saying the licenses are overpriced, because their isn't enough cashflow even if you were open the maximum hour of numbers. The point is that running a bar inside of a suburban restaurant from 10-2 doesn't generate enough revenue to justify the marginal costs, never mind amortize the fixed costs of the licenses.

Seriously? I'm sorry but that isn't even close to true- at least not if the marketing is done correctly. The Closter location that is now Azucar has had many, many incarnations. Those that failed, such as Cask 171 ( who ONLY marketed the bar) and Delmonicos ( who ONLY marketed the restaurant) simply failed to integrate both properly. Fiddleheads, which DID integrate both properly, was extremely successful.

 

This location is a prime example for showing how integration works because the building is shaped like a barbell, with a bar on one side and restaurant on the other- 50/50. If un-integrated, 50% of the real estate is nothing but wasted space and a money pit.

 

I have also seen new restaurants that would have died out in a few months end up with long term success because of the bar.

 

The profit margins on cocktails are WAY higher than that of food, with average costs of 14-18%.

 

Even bars that are NOT part of restaurants can be and are successful- even including smaller neighborhood bars. This would seem to negate the argument given above that staying hopen doesn't generate enough to cover the cost of the license. It does, and quite profitably- or I would not have made what I have from the bar side of it.

 

I'm sorry, but all that I've seen here so far is that the restaurant owners either simply have no idea how to run the bar side of the business properly, or have no idea of the income the bar can bring, or have no idea how to market that end of things while integrating in a proper manner with the restaurant side.

 

Or maybe they just don't have the drive to do the work and want to go home early- who knows?

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