By JAIMIE JULIA WINTERS
Dai Kichi restaurant on Valley Road has opted to go BYOB after fetching a staggering $1,250,000 for its liquor license, the highest price paid in Montclair’s history.
Last year, South Park sold its license to Fin Raw Bar for $1.2 million, while the Pig & Prince only paid $755,000 to acquire its license back in 2012.
Dai Kichi’s license, transferred to Montclair 401, LLC. on Feb. 20, will join the list of two other pocket or inactive licenses, owned by Dick Grabowsky, LLC and New Montclair Entertainment.
Liquor licenses priced as low as $10,000 20 years ago are now hitting the million-dollar mark across the state. So what’s driving up the cost?
Although the licenses are privately owned, the number of licenses are regulated by population and a formula created in 1947 keeps the number low. Now, that formula is not meeting the demand of entrepreneurs who want to open a bar and restaurant owners wanting to offer their patrons a highball with their meals.
The current law has created a monopoly driving up prices that only a few can afford, said Dr. Morris A. Davis, Chair of Real Estate and Professor of Finance and Economics at Rutgers University.
“What kind of food are you going to get and what kind of prices are you going to pay if the restaurant has to pay $2 million for a liquor license?” Morris said.
Montclair has an allowance of 12 consumption (restaurant/bar licenses) and 11 plenary (carry-out) licenses. The 1947 New Jersey law allows one consumption license per 3,000 residents. Montclair’s official population is 38,977, just shy of the total required for a 13th license.
When Linda Wanat took over as township clerk in 1998, Montclair was only 200 people away from being allowed one more consumption license. Following the 2010 census, Montclair still didn’t have the population to allow another license. With the next census only two years away and multi-family developments on the rise, the hope is that town will be up to at least 13 licenses.
But even at 13, competition will be stiff among the roughly 300 restaurants in Montclair, driving prices upward.
Morris contends the system has to change for towns “where residents want to live, work and play.”
“If we are serious about redevelopment, part of the process is to provide entertainment and with that you have to make it easier to sell beer and wine,” said Morris.
In some towns, a post-Prohibition pub boom created a tavern on every corner. This was the scenario in East Rutherford, which has a population of just under 10,000. The town has many more licenses than the formula allows, but its 19 consumption licenses were grandfathered in with 1947 law. Even there however, the competition is fierce and the licenses catch a hefty price. The most recent license to sell cost close to $800,000.
But a bill, if signed into law, would not only allow municipalities to create an unlimited number of special licenses for restaurants, but also at a more affordable price for potential restaurateurs. At the discretion of the town, special licenses could be issued to restaurants up to 3,000 feet with an initial fees of $3,000 and for eateries up to 6,000 feet at $10,000. Restaurant owners could also apply for a beer and wine license at $1,500 and $5,000 as initial fees. The special licenses would be subject to the same annual renewal fee as current licenses of $2,500. Assemblyman John Burzichelli, representing Cumberland, Gloucester and Salem counties, has joined with five other legislators – none in Essex County – to draft the legislation.
Some current license holders are against the creation of the special licenses contending it would deflate the prices of the licenses they spent tens or hundreds of thousands to obtain. The legislation takes this into account, however, and allows for the owner to get tax credits at the current fair market price over a five-year period.
In 2009, a group of East Rutherford restaurant owners and New Jersey Restaurant and Hospitality Association sued the state over the plan to grant 19 special concessionaire permits to bars and restaurants within the American Dream Project complex in the Meadowlands. The suit failed because the mall is on state property, not private.
“I don’t see anything wrong with this legislation. It creates more licenses at a fair price and gives tax credits for those who bought [at a high price],” said Morris.
Ironically, some towns have opted out issuing consumption licenses, which the 1947 law also grants. Rutherford, where bars are zoned out of downtown and BYOB is the popular option for restaurant goers, didn’t offer consumption licenses until the 1990s and have two that remain unsold.
In Montclair however, Wanat said offering more licenses is good for the businesses and the residents in town.
“It has been my personal mission to get more licenses for Montclair,” Wanat said.
Montclair Liquor Licenses
•Pig & Prince
Trois Cochons, LLC
•Egan’s Bar & Grill
MISC FN’B, LLC
Tiara Oliveira (Pinnacle)
The Office of Montclair LLC
Fin Raw Bar & Kitchen
and The Crosby
Essex Restaurant Group, LLC
Tierney’s Tavern, Inc.
Trumpets Jazz Club
D.L.V. Lounge, Inc.
•Dick Grabowsky, LLC
Montclair 401, LLC (formerly Montclair Food USA Corp
• Dai Kichi Restaurant)
•New Montclair Entertainment