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Although state lawmakers are addressing a chronic shortage of licenses that allow restaurants to serve alcohol under numerous restrictions, coveted club permits that ease constraints for businesses lucky enough to hold one remain scarce.
After waiting two years, the Dojo Restaurant and Sushi Bar in Salt Lake City snagged a club license earlier this week— but 14 other applicants continue to wait, and their prospects for relief anytime soon don’t appear to be promising.
Dojo Restaurant and Sushi Bar
Menu » Asian-inspired cuisine, serving all types of alcohol
Location » 423 W. 300 South, Suite 150, Salt Lake City
Lunch » 11:30 a.m. to 2:30 p.m., Monday-Saturday, closed Sunday
Dinner » 5:30 p.m. to 10 p.m., Monday-Saturday, closed Sunday
There’s a lot at stake because club liquor permits are starkly different from restaurant alcohol licenses. If an eatery holds the former, it does not have to erect a partition, or so-called Zion curtain, to shield bartenders from public view or hide open bottles of liquor and beer taps in back rooms, as those who hold the latter do. Diners in a restaurant with a club permit may get a cocktail or glass of wine without an order of food, a service not permitted in restaurants that have the more restrictive license.
Restaurant owners say any license that enables them to serve liquor enhances their business, but demand for club licenses is such that the waiting list has grown to as many as 21 applicants this year. Although lawmakers, bending to appeals from the governor and those in the business community, have created more restaurant permits in the name of economic development and appear poised to do more, they have refused to tinker with population quotas that determine the number of available club licenses.
Quotas have been so strict that the state had no club licenses to give from June 2011 to July of this year, and when the population grew enough for new permits to be issued, no more than one or two club licenses became available in a single month.
Legislative leaders generally have been unwilling to remedy the situation, citing concerns about drunk driving, underage drinking and overconsumption. More than 80 percent of legislators are members of The Church of Jesus Christ of Latter-day Saints, which teaches its members to refrain from drinking alcohol.
The permit shortages carry big impacts.
Dojo co-ower Kelly Shiotani applied for a club license in November 2010, shortly before the restaurant opened, but had to settle for a restaurant alcohol permit, whose restrictions he says are expensive for operators and confusing for guests.
For instance, six hotels without dining facilities are within a two-block area of the Dojo, but when their guests came to the restaurant they often walked out when told they had to order food before they could get a cocktail or nightcap. Those who stayed became confused when bartenders had to mix drinks in a back room, rather than at the restaurant’s bar area — which under the restaurant permit could not stock any liquor. In addition, wall beer taps had to be rendered inoperable and servers were forbidden from opening bottles of beer in diners’ view.
"The club license allows us to be more hospitable to our guests, and it’s much more efficient for our business," said Shiotani. "Before, we had to tie up a lot of space in the kitchen, where we had to mix drinks, while at the same time, we couldn’t use our bar."
Another reason club licenses have been scarce is that under state regulations, bars must compete with restaurants, such as the Dojo, for a permit.
Here’s how it works. Club licenses fall into two categories — social or dining — but the quota system does not take account the type of permit that’s issued.
For instance, a bar must have a social club permit, meaning minors are not allowed and customers don’t have to order food with an alcoholic beverage. But a dining club permit allows minors, and the establishment must have at least 60 percent of its sales from food.
The scarcity of club licenses has caused some creative financial responses. Shiotani said he was privately offered a club license for $50,000 but could not afford it.
When he began applying for a club license two years ago, 25 entrepreneurs went away empty handed. In May, 45 applicants vied for a single restaurant permit, and the month before, 28 license applicants were unable to get one.
As concerns about the shortage increased, lawmakers in July voted to create 90 more restaurant licenses, and Gov. Gary Herbert quickly signed the legislation, which went into effect immediately. Still, some commercial developers are worried that liquor permits will again run dry as early as next spring. The legislation did not address numbers of club permits.
Sen. John Valentine, R-Orem, who authors most of the important liquor-related legislation in Utah, is planning to introduce a bill in the upcoming session that would free up more restaurant licenses by allowing chain restaurants to obtain a single "master" license for all their locations.
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