Food For Thought

Liquor Licenses—Driving the Cool Factor North

Through the planning, development and financial number crunching that go into new restaurant and bar ventures, liquor licenses have become essential components. Sure, everyone loves to have a nice cocktail or wine during a meal, and restaurants want to provide that courtesy, but the bigger picture is that liquor sales have become crucial for tenants to support the cost of modern-day rents. Liquor sales tend to have the highest margins and can become the most frequent orders among customers enjoying themselves during each seating. Hence, when formulating a business plan and projections, these licenses are a necessary component in the formula for survival and success.

As liquor at every full-service restaurant has become the norm, the largest obstacle new ventures consistently face has become the community boards. Bars and nightclubs are almost denied off the bat unless a large food component is incorporated with each concept. Community boards can vary in how opinionated, lenient or judgmental they can be for each neighborhood, and one must take them into consideration when securing a location. Each board discusses factors including the number of licenses issued in the vicinity, the history of the location and the history of the operator, as well as any thoughts neighboring residents who weigh in on the judgment have. It is very difficult to get SLA license approval without the support of the local community board. As it presently stands, Community Boards 2 and 3 are among the most difficult to get approved by. These boards oversee Greenwich Village, the West Village, Soho, Noho, the East Village and the Lower East Side. Yes, the “cool” neighborhoods.

In lieu of undergoing the difficult process and the mishegos involved, the cool factor, I have been noticing, is migrating north. Midtown, the Upper West Side and the Upper East Side are becoming more attractive for these operators, and the trend is starting to take shape. An example can be seen in the new Upper East Side hot spot The Penrose, from the West Village Wilfe & Nell group, which is drawing significant numbers for happy hour as well as weekend brunches and night outings, despite the fact that The Penrose is hidden on Second Avenue behind subway construction fences.

The recently signed 2418 Broadway by a principal of the I Tre Merli Group is another indication that the hot spot trend is heading uptown, and the move makes a lot of sense. If there’s business to be done up there, not to mention an easier approval process and an eager crowd, why not make the jump? Keep in mind that less-expensive residential rents uptown have also attracted a younger generation that partakes in weekend nightlife activities.

It’s happening, and it’s only a matter of time before these markets start to take shape and old boutiques are given face-lifts by today’s designers and architects.

If I am betting on a “coolness trend,” I wager it’s time to look north.

Follow Josh Siegelman via RSS. Jsiegelman@winick.com