Worcester Business Journal

6 Worcester Business Journal | October 26, 2020 | wbjournal.com Pull out all the stops for the restaurant industry E D I T O R I A L A lively restaurant scene is vital to the economies of Central Massachusetts communities like Worcester, Marlborough and Sturbridge. As shown in WBJ's "No Limits" story on page 8 – our latest collaboration with the Worcester Regional Research Bureau – these communities have helped build this buzzy industry thanks in part to their eschewing of the traditional Massachusetts law capping liquor licenses. Now, as restaurants continue to reel from the coronavirus pandemic, governments throughout the region need to do everything in their power to help them survive the crisis. Restaurants do not produce an economic output even close to sectors like manufacturing, nor do they have the large numbers of highly paid workers like the healthcare and higher education industries, but it's an important sector speaking to the vitality of a region. Worcester wouldn't in the last few years have attracted commercial and residential developers, life science firms, and the Boston Red Sox Triple A affiliate if not for the reputation of its restaurant scene. Restaurants help attract other businesses, and they are vital in keeping workers at those companies out and about past working hours, which is why Marlborough placed such importance on brewpubs and restaurants in its push to be known as an 18-hour destination, rather than a corporate hub with drive- in, drive-out workers. As the restaurant industry flounders under the tough regulations imposed by the state in the effort to slow the spread of the coronavirus, the answer for restaurants isn't necessarily all Central Mass. communities liing their liquor license caps. at could create more competition, when the focus should be on helping the existing businesses. ese efforts to help should include accommodations restaurants have been asking for. Worcester lied outdoor dining restrictions earlier this year in order to help restaurants reopen their dining rooms. Yet, as Michael Covino, president and CEO of Worcester's Niche Hospitality Group, pointed out at the time, restaurants without previous outdoor dining had to make significant investments to offer the service, which wouldn't pan out unless Worcester eased the restrictions for a couple years. To this end, Worcester needs to make outdoor dining a fixture of its street-use policies well into the future. With the pandemic, the overall focus should remain on safety and reducing contagion, but restrictions on restaurants – including alcoholic beverage sales and takeout rules – should be kept at a minimum until the region returns to more normal conditions. e end of the pandemic is still a ways off. Most restaurants operate on very thin margins to begin with, and most of its workers are on the lower end of the income spectrum. Without additional help, more establishments will close down permanently as the months fall off the calendar. W the 10 largest no-quota communities have 1.4 licenses per thousand residents, while the 10 largest communities with a quota have 0.91 licenses per thousand. For wine/malt only licenses, the 10 largest no-quota communities have 0.26 licenses per thousand, while communities with a quota have 0.15 licenses per thousand. One function of having no quota is that wine/malt licenses may be treated differently than in communities with a quota. In no-quota communities, given the option between a license with more restrictions and a license with fewer, business owners may opt for the one that offers them more freedom. In communities with a quota, though, wine/malt licenses may be available where all-alcohol licenses are not. Worcester has around 1.3 regular licenses per thousand residents, the third highest rate among the 11 original Gateway Cities (see table 1). It has .08 wine/ malt licenses per thousand residents, the ninth-highest rate. Haverhill, the other Gateway City with no quota, similarly ranks higher for regular licenses than restricted ones. Worcester Liquor Licenses In 2019, the City of Worcester had 240 regular liquor licenses and 15 wine/malt licenses, for a total of 255 organizations that serve alcohol as part or all of their business. If Worcester was bound by the liquor license quota formula, based on its 2010 population, the city would be restricted to 198 regular licenses and 37 wine/malt licenses. Worcester exceeds its (hypothetical) quota for regular licenses by 42, the third-largest degree in the state, trailing Boston and Cambridge. Worcester has a number of local regulations that are enforced in addition to ABCC rules and regulations. Among these are a rule that each patron may only be served one drink at a time, guidelines for the dimensions of booths to ensure "persons therein can be seen at all times," a requirement that patrons be given a receipt for any cover charge levied, a ban on window coverings that would obscure the view of the interior from the outside and a ban on bottle service. Most of Worcester's liquor licenses are granted to restaurants, mirroring statewide patterns (see charts 2 and 3). Worcester does have significantly more "general on-premises" establishments, often granted to bars or nightclubs that do not serve food. Nearly half of Worcester's liquor licenses were issued in the last five years, slightly above the statewide figure of 38 percent (see chart 1). Worcester saw 32 new liquor licenses granted in 2019, including to a new brewery and winery, four bars with arcade or video game themes, and multiple new establishments in the city's well-established Shrewsbury Street and Canal District corridors. Conclusion A cap on on-premises liquor licenses may make sense for some communities, especially those that see limiting the number of bars or restaurants in town as a positive. Given the number of cities and towns that have exceeded their cap, though, it is clear that not everyone sees limiting alcohol-serving establishments as a desirable goal. If a community's goal is instead to foster thriving entertainment and nightlife districts, the lack of a pouring license cap has proven to be a competitive advantage when attracting bars, breweries and restaurants. State liquor license records show that the 25 communities without a cap have more liquor licenses per capita, on average, than the rest of the state. This correlation is to be expected—setting up an alcohol-serving establishment in a municipality that has reached its cap is more difficult and expensive than opening in a city like Worcester without a cap. The difference between communities with a cap and those without manifests itself both in the number of bars or restaurants in town and in other ways. Among Gateway Cities, Worcester is third in terms of regular on-premises liquor licenses per capita, behind Pittsfield and New Bedford. But both of those cities—due to being well over the cap—deal with public frustration in the press about a lack of liquor licenses, government officials trying to prevent the loss of existing licenses when a business closes, and a secondary market where licenses sell for thousands or tens of thousands of dollars. This can be a barrier for entrepreneurs, especially those with limited start-up capital. Meanwhile, in Worcester, the fee for a license is $200 and liquor license grants and transfers rarely make the news, creating a regulatory structure that is both more equitable and easier to navigate. Many factors influence the development of alcohol-based industry, including many that are outside the public policy realm. It is possible that Worcester and other no-cap communities would have developed thriving bar and restaurant scenes while operating under a cap. But given available data around liquor license patterns statewide, it is clear that the lack of a pouring license cap is a contributing factor to the vibrancy of Worcester's bar and restaurant industry. W Continued from page 5 Worcester liquor license distribution Worcester Business Journal WBJ

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