Tough Liquor Laws Dampen Chain Openings In Utah

Fewer chain restaurants are opening in Utah, and the slowdown is a direct result of restrictive liquor laws that can force changes in floorplans and business models, according to The Salt Lake Tribune. The newspaper reports that the state’s laws make it time-consuming and cost-prohibitive for national chains to open a restaurant there. The report is based on data from the Utah Dept. of Alcoholic Beverage Control, which reports that the number of liquor licenses obtained by national chains has dipped since January 2010, when lawmakers required restaurant bartenders and open liquor bottles to be hidden from public view in newly opened units.

That mandate is forcing some operators to add sight barriers, increase staffing or simply open units elsewhere, according to commercial real estate brokers interviewed by the newspaper. One said he’s lost clients who were considering Utah for a new location because they would be at an economic disadvantage when competing with existing restaurants that are exempt from the barrier mandate.

Since the law went into effect in January 2010, the Tribune reports that only two national chains have obtained liquor permits: California Pizza Kitchen and New York Pizza Delicatessen.

Even factoring in the national economic downturn, that is a steep drop in new-unit chain openings. In 2009, national chains opened 16 new restaurants; seven opened in `08, and 14 in `07.

While the law has dampened chains’ interest in Utah, more locally owned restaurants are going into business; more than 150 were awarded liquor permits in 2009. Chains face a longer wait, according to the paper, often up to several months.

A newly enacted state law goes into effect next year allowing establishments to sell their licenses on the open market. Obtaining a liquor license in a competitive marketplace could cost hundreds of thousands of dollars, adding to the costs of opening a restaurant in Utah.