Rant: Does A Restaurant Need A Liquor License?

Ponder for a moment your favorite full-service restaurants in Boston, ignoring fast casual and fast food spots. Now, consider those restaurants that came to your mind. How many of them don't have some type of liquor license? Your answer is probably zero.

Check out the recent lists of the top full-service restaurants of the year that have appeared in multiple media sources. Almost invariably, each restaurant on the list has some type of liquor license. When is the last time you saw a full-service restaurant without a liquor licenses ending up on their Best Of lists? It is quite the rarity. And even when that rarity occurs, the restaurant commonly has BYOB available.

Let's face it, a full-service restaurant would have difficulty surviving for any length of time without a liquor license. It is commonly stated that many restaurants derive about 30% of their revenue from alcohol sales. In addition, the margins on food are usually low, in the single digits, while margins on alcohol sales can average about 30%, if not more. With all of the costs and expenses involved in opening and operating a restaurant, increasing your margins is an imperative to long-term survival.

Without a liquor license, a restaurant grants a significant competitive advantage to restaurants which possess such a license. And it can be even harder to overcome that advantage if surrounded by numerous restaurants that serve alcohol. If a group of people are seeking dinner, and even just one member of that group desires alcohol, then the restaurant without liquor will likely be ignored. This is one of the reasons why liquor licenses are so valuable in the Boston area, as restaurant owners understand how important alcohol is for many potential customers.

Some cuisines and foods also seem to go hand and hand with certain alcoholic beverages. At Asian restaurants, cocktails and beer are commonly more important than wine, while at a steakhouse, big, red wines are very popular. Can you imagine an Italian or French dinner without a glass of wine? Plenty of people even desire a beer with their burgers. A well crafted drinks program is important to me when I'm selecting a restaurant, and I'm far from alone in that sentiment.

So, can a restaurant survive, and thrive, without a liquor license? It is certainly possible but is also a difficult endeavor. Their food needs to be of superior quality and taste, and so compelling that people are willing to forgo alcohol to dine there. It should probably also be more unique, something that diners can't easily find elsewhere. If it isn't unique, then why should people dine there rather than a similar place where they can also purchase alcohol? People might dine there once, for novelty's sake, but unless their experience is superb, they may not rush to return.

With the difficulties and high expense of obtaining a liquor license in Boston, it is tough for a new restaurant, especially a small, independent spot to obtain one. However, the reality is that few full-service restaurants seem to survive without one. This is a reason some restaurant owners have chosen to open in the suburbs, where licenses are easier and cheaper to obtain. Changes may be coming to the liquor license scene in Boston, with the possibility of more licenses becoming available, but nothing is guaranteed.

A restaurant may not need a liquor license, but without it, they are operating their business with a significant disadvantage.