Tough Liquor Licensing Laws Helping or Hindering Philadelphia Restaurants?

By Kae Lani Kennedy, Foodable Contributor

Antiquated, cumbersome, and a hassle to get. Liquor licensing laws in Philadelphia have always been a hot topic amongst new restaurateurs trying to decide whether or not to make the substantial, upfront investment to be able to put wine, spirits and cocktails on the menu. Yes, restaurants profit margins on the sale of liquor range from 65% to 80%, but many restaurants in Philadelphia say it’s not worth it.  Why?

They’re Difficult to Obtain

In the 1970s and 1980s, liquor licenses cost anywhere between $15,000 and $18,000. It was an investment, but still somewhat reasonable. Prices skyrocketed during the last decade of the century, and by 2002, licenses were being sold for $35,000. Now, 12 years later, the cost of a liquor license is more than double, and are being sold for about $85,000.

On top of the high cost, the city of Philadelphia has only a limited number of licenses it’s allowed to allocate thanks to post-prohibition legislation, which says that the city can only give out a certain number of licenses depending on the city’s population; a population that has grown by 100,000 new diners in the past 20 years.  

The Liquor License Loophole

In recent years, Philadelphia has experienced a restaurant boom, with more new and innovative menus overwhelming diners with options. In this inundated market it’s important for chefs and restaurateurs to differentiate themselves. Many try through quirky cocktails, extensive wine lists, or offering specialty beers on tap, but for those who opt out of the initial investment of $85,000 have found a way around the law, and are using it to their advantage.

As a result to the liquor license conundrum, Philadelphia has arguably the most BYOBs – that’s Bring Your Own Bottle – restaurants, many of which have no corkage fee. BYOB’s give diners unlimited options and can save them 15% to 20% on their final bill. Restaurants are also saving money and resources when opting to be a BYOB, saving on stocking alcohol and hiring and training bartenders.

The spike in BYOBs has forced restaurants with and without liquor licenses to maintain high quality food standards and specializations in order to compete. Stock, a BYOB located in Fishtown, specializes in high-end Pho and features one of the city’s only completely vegetarian stock for Pho.

Even world-class chefs are catching onto the novel concept. Though it does have a full bar, the Garces Trading Company makes it simple for guests to bring their own bottle with a wine boutique attached to the restaurant. It allows the restaurant to offer a wide selection of wines while selling them to customers without the markups.

From BYOB to Full Bar

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After several years of operation, established restaurants have decided to make the transition from BYOB to having a full bar. After nine years, Lolita’s owners decided to make the investment in a liquor license mentioning “people don’t go here because we’re BYOB anymore”.  One of Center City’s most popular brunch spots, Green Eggs Café, has also decided it was time to invest in a liquor license, adding boozy milkshakes and brunch cocktails to the menu.