BYOB

[sohail]

Thank you all for all the other advice, I am giving the real estate agent one hell of a time, discussing things that need to be on the lease. I think she was somewhat taken aback with some of the new stuff i hit her with.She started to stamer a bit, which seemed like a good sign to me.

I also made a decision to buy the equipment second hand, at a low price, from a very well know local supplier that has been providing equipment for restaurants in town, at a very reasonable price, and he stands by his product.

Just to hit you with something new, so you don't get bored, here is a doozy of a question:

Purchase a liquor license, or for the first couple years go BYOB, or go with a beer and wine license?

A liquor license will run me anywhere from $130,000 to $150,000, which is a hell of an expense, but on the flip side, I have also always heard that the money is not in the food sales, but in liquor sales! Therefore, it makes me wonder if going BYOB for the first couple years is a bad idea?

Please bear in mind that my food is going to be light European cuisine, and I know i would be able to sell wine and cocktails with my food. But, if i decide not to go into debt an extra $150,000 for the liquor license, that means BYOB!

[cewall]

The money from liquor sales is something that you'll need in the beginning. If you rationalize the cost of the license, you'll see it isn't really that big of a deal. Say you sale nothing but $5 liquor drinks, you'll have to average about 77 drinks a week to make back your money. That's 11 drinks a day. Granted I didn't factor in the cost of the liquor in the drinks but I just did the math as a demonstration. You definitely sell more than 11 drinks a day with your meals and 5 dollars is probably less than you'll charge for the drinks.

Bottom line is that a liquor license is one thing you'd be mistaken to pass up on.

[BistroOwner1]

wow, Wow, WOW!!!! $150,000 for a Liquor Licence?? That seem absolutely incredible! When I opened my place in Virginia, I winced at having to pay $1300. It's very true that there is money to be made in alcohol sales, a lot in fact if you do it right, but you are going to have to sell a lot of Martinis to recoupe that kind of cash. My problem with the BYOB idea is ---ewww, I don't want to have to bring my own bottle of wine or booze to dinner with me. I would much rather pay for a high priced cocktail.

I guess when weighing it out, you have some things to think about.

#1 - How common is it in your area for people to come out to a nice place for dinner and BYOB?
#2 - What kind of impression are you making on your customers, who have to bring their own bottle. (Not such a nice place, too cheap to purchase a liquor licence, this is absolutely the norm?)
#3 - When 9 out of 10 restaurants don't make it through their first year (playing devil's advocate here) Do you really want to fork out the extra cash if you don't have to in start up costs.
#4 - If you DO, can you recoupe it in the first few years?
#5 - Is a Beer/Wine licence considerably cheaper than a full liqure licence? If so, could you start with that and eventually go to a full licence?

From my perspective, I would rather go to a place where I can get a drink with my dinner, I could settle for a nice glass of wine though, and would rather do that than BYOB.

Tough call.

[lebelage]

You could go with a beer&wine license instead of full liquor. Much cheaper.

[lesanglierrouge]

I think you should go with a full liquor license from day one. Your best margins in the business as a whole are on mixed drinks. Plus if you later tell people that they can no longer BYOB then some may be put off.

[lebelage]

Yeah, but the margins on the liquor don't do much for you if you spend all your money on the license. Many successful small place with limited funding start with a beer&wine license and move up to liquor if they see fit after they've started recovering some of their opening funds.

Remember- it isn't just the license, there's pretty hefty liability coverage you have to pay every month on a full license.

[LisasGourmet]

HOly Cow!! A full liquor license here in little ole springfield is only $800 for a food establishment!

I don't think I'd ever pay $150,000 for a piece of paper --- unless it was my mortgage!

Isn't that a bit unreasonable cost? I'm just asking.

[lebelage]

In some places there is a cap on how many licenses are issued. No new ones issued at all. In these places someone who has one to sell can ask whatever they want- because there's no other way to get it.

[jonesg]

A beer and wine license should be les than $2K.

A 150K full license will cost you well over 200K by the time they get through with you and don't forget the bar construction and bartender ,aka silent partner.

MAke sure you can see the complete picture, the license itself is just the peice of paper on the wall. Now what?

With beer and wine you need a chest cooler for the beeyah ($2K)and a glass door wine cooler($400).

Full liquor license's need a complete bar, stools and the lot.

I know which way I'd be going.

[lesanglierrouge]

Isn't that a bit unreasonable cost? I'm just asking.

Yes! But so is everything else pertaining to US liquor laws.

[Lorraine]

From a consumers point of view. Montreal has so many BYOB's, that they have published guides to them. When we go to a local restaurant here, our bar bill far outweighs our food tab. The markup on wine is often 400%. So, we don't go out often.

In Montreal, people I know tend to eat out more, at BYOB's. The cash outlay for the wine may have been months prior, and has been forgotten. So, they still spend, because they think they are getting a relatively inexpensive meal. To me, it's the difference between visiting a restaurant once every 4 months , given the wine markup, or, maybe every 3 weeks at a BYOB. I support the BYOB's any chance I get. As long as the food is good.

[JewelsQ]

I recently attended a wine-tasting course and the regular folks listed the BYOBs because they COULD bring their own wine.

In my town, there are no more liquor licenses to open. In order to get one, you need to buy one from someone, hence the high asking price.

[jonesg]

"But so is everything else pertaining to US liquor laws.
"

the license itself only costs $2K, its the limited availability in any given area which drives the price up, you basically have to buy it from someone who owns the right to it already. So its a private party sale.

Same goes for taxi medalians in metro areas, $125K for a $900 license !.

Thats free enterprise.

[Ccaruso]

Here in New Jersey alot of places are BYOB and most do a fantastic business. I have a guy that opened up an upscale steakhouse 4 months ago without a license and he has been booming since day one. He got his license recently and still has a big business. He has a lounge also in the resturant.

I would definitely go with a beer and wine. I think that is where you will make most of the money anyway.

[jonesg]

"I have also always heard that the money is not in the food sales, but in liquor sales! "

You have heard bunk, if thats really true then just open a bar. Talk to people who own licensed restaurants, get experience , not opinions.

The % markup might be great on booze but not everyone drinks, not everyone wants a bottle per person.
But everyone eats and the food will outpace the liquor overall , unless the food blows in which case the liquor sales won't save it anymore than great desserts won't save a bad dinner.

And you can't deposit % in the bank.

What counts is the ratio between food and alcohol sales.
Also, there are restrictions in some states about the ratio of food to alcohol sales.