Utah protects restaurant chains against liquor license shortages
Published: August 12, 2013 04:54PM
Updated: February 14, 2014 11:31PM
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Chris Detrick | The Salt Lake Tribune Buffalo Wild Wings' Lehi restaurant. Last year liquor licenses were in such short supply that Buffalo Wild Wings stopped construction on its Layton location until the chain could get a liquor permit. Since then, lawmakers have protected restaurant chains against license shortages by creating master liquor permits, which became available in May.

Last year liquor licenses were in such short supply that Buffalo Wild Wings stopped construction on its Layton location until the chain could get a liquor permit.

Since then, lawmakers have protected restaurant chains against license shortages by creating master liquor permits, which became available in May.

Although no chains have applied for a master license yet, officials are confident these licenses will be in demand when there’s another chronic license shortage.

“It’s a matter of education,” said Melva Sine, president of the Utah Restaurant Association. “Anytime there’s something new it takes time to take hold. Once people realize master licenses are out there, they’ll want to know more about the advantages of these types of licenses, but right now, we’ve gotten no calls.”

To qualify for a $10,000 master license to serve all types of alcohol, a restaurant business must have five or more locations in operation or in the works. Chains wanting limited-service permits allowing only beer and wine will be charged $5,000 — and they also will have an unlimited number of licenses as new stores are added.

That’s in addition to costs for each new license. For instance, a full-service permit, allowing all types of alcohol costs $2,200, along with an application fee of $330.

During shortages, smaller applicants will have to wait until permits become available, a pool that is based on a quota formula tied to the state’s population. But if chains convert to a master license, their existing licenses would go into the pool, supposedly easing the shortage and helping mom-and-pop-type restaurants seeking to serve alcohol.

Hotels and resorts, for example, hold 54 full-service permits and two limited service licenses — all of which could become available for smaller businesses if each chain converted to a master license.

But Blake Spalding, co-owner of Hell’s Backbone Grill & Farm in Boulder and board member of Local First Utah, said master licenses don’t take into account small, independent businesses.

“Once again, the state is showing it favors large corporations over small business because the Legislature could do the same thing by simply making more licenses available when they are in short supply,” she said. “It’s not logical to create a false demand by limiting the supply of licenses or to make it easy for corporately held chain restaurants to get licenses while making it complicated and time consuming for small independent restaurants to have what they need to operate a viable business.”

The new master licenses also streamlines procedures in case of liquor violations.

Only offending stores under master permits would be assessed fines or face license suspensions — not the entire chain as is now the case. Disciplinary action would be taken against the parent company if 25 percent of its restaurants commit a serious or grave violation, such as serving alcohol to a minor, or half its stores violate lesser liquor laws, such as servers forgetting to wear their name tags, within the time period of a year.

“Master licenses solve a lot of problems,” said Steve Bogden, managing director of Coldwell Banker Commercial. “If a company wants to put in several restaurants, it’s so much easier to apply for a one license. And if there are violations of rules and regulations, individual restaurants are penalized instead of the entire chain.”

Hotels and resorts also hold 47 coveted club or bar licenses. But these permits are not included in master licenses so chains that convert may keep their club permits, said Vickie Ashby, spokeswoman for the Utah Department of Alcoholic Beverage Control.

Club licenses are in such short supply that 12 applicants vied for a single club license in July. In addition, seven clubs sold their interests to other businesses wanting their bar license. Some of the new businesses have opened bars and clubs at the same site while others have moved to other locations.

Key lawmakers have repeatedly stressed that they will not change population quotas for any more club licenses because of concerns about underage drinking and drunk driving.

At the same time, Utah’s changing demographics are putting pressure on the number of licenses in every category.

Drinkers in the state are downing nearly a third more liquor than they did six years ago, according to the DABC. And the population quota system for creating additional licenses does not take into account the millions of tourists who dine in Utah each year.

Last spring, a spokesman for Buffalo Wild Wings Grill & Bar, told liquor commissioners that the chain would have to delay opening its second Utah location if the restaurant could not serve liquor.Liquor control commissioners in turn, bypassed other applicants to award a permit to the chain to keep construction moving. Today, the Minneapolis-based Buffalo Wild Wings operates eight Utah restaurants in Layton, Lehi, Logan, Riverdale, Midvale, West Valley City, Sandy and South Jordan, and more than 900 restaurants nationwide and in Canada.

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Restaurant master liquor license

Chains • May hold a single permit rather than licenses for each location.

Cost • $10,000 plus initial liquor licensing fees for each new location.

No charge • For chain’s existing permits other than annual renewal fees.

Quotas • Chains may pay to convert to master license when permits become scarce.

Small eateries • During shortages, applicants must wait until permits are available.