The winning bid for a restaurant liquor license in Lancaster County topped $400,000 in a recent statewide auction as interest from grocery and convenience store operators is keeping prices high.
Turkey Hill bid $407,600 for the one available license from Lancaster County being sold as part of the Pennsylvania Liquor Control Board’s auction of 42 expired licenses in the state.
A Turkey Hill spokeswoman said the convenience store operator has not yet decided where it would use the license.
Other bidders and their bids for the license, which came from Elizabethtown, were: Rutter’s, $384,000; Sheetz, $375,000; Giant Food Stores, $371,102; and Weis Markets, $302,112.
This was the second statewide auction of expired licenses since last summer’s changes to liquor laws which created the process.
In first auction in November, two licenses from Lancaster County went for $375,002 and $383,500.
Aaron Zeamer, an attorney with Russell, Krafft & Gruber who specializes in liquor license transactions, said interest from large convenience and grocery store operators is scaring away smaller, independent restaurateurs.
“There’s just not that many independent restaurants that are even looking for licenses because they see the market and know they’re priced out of the game,” Zeamer said.
Prices for restaurant liquor licenses in Lancaster County were about $150,000 just over three years ago.
While grocery store beer cafes emphasize takeout sales, they use the same kind of liquor license that a bar does.
Absent legislation that creates new licenses or puts grocery and convenience store operators in another category, Zeamer said prices will probably continue to go up.
A market for licenses
Restaurant liquor licenses are governed by the state Liquor Control Board, which has a quota of one license for every 3,000 residents of a county.
But since the quota had previously applied to each municipality and has been changed over the years, nearly every county is well over its quota amount.
Consequently, anyone wanting a restaurant license must buy one from someone who already has one in a private sale.
The liquor control board’s auction of expired liquor licenses offers another way to get a liquor license, while also make the bidding process public.
Once again, grocery and convenience stores dominated the bidding.
Of the 42 licenses that attracted qualified bids, 35 high bids were from grocery or convenience store operators.
Sheetz was the high bidder for 15 licenses and Giant was the high bidder for 11.
In addition to the one in Lancaster County, Turkey Hill was the high bidder for licenses in Lebanon, Luzerne and Schuylkill counties.
Rich Hewitt, a broker who handles liquor license sales in New Jersey and Pennsylvania, said the high bid from Turkey Hill for the Lancaster County license is about what he was expecting.
“They’re paying the market,” he said.
However, Hewitt said once the large grocery and convenience store chains have all the licenses they need, prices could drop, noting that’s what’s happened in Philadelphia.
On the other hand, Hewitt said prices could keep going up since licenses bought by those large companies are essentially off the market, leaving a smaller pool of available licenses for interested buyers.
“Your guess is as good as mine,” he said about the direction of prices.