Liquor license loses its luster

Source: Jackson Citizen Patriot
After 30 years of serving up beers and cocktails, P. J. McDonald wants out.

After more than 30 years of serving drinks and slinging burgers, Jerry Wert did get out and he couldn't be happier.

McDonald and Wert have both served time running one of the most regulated small businesses in the country as independent owners of pubs and taverns.

McDonald, who runs PJ's Bar at 310 S. Mechanic, is trying to sell his business.

Wert sold his, Jerry's Place, 145 W. Pearl, about two years ago.

There are 50 Class C liquor licenses in the city of Jackson. Of those, four are inactive or in escrow, said Linda Wood, secretary to the director of licensing at the Michigan Liquor Control Commission.

Four unused licenses in a city like Jackson is not unusual, Wood said.

"They could put them in escrow for a number of reasons," Wood said. "There could be an illness in the family and they are unable to run the business. Or they could be remodeling the business."

Basically, there are two ways to secure a Class C license, either by applying for a new one or through a transfer from an existing business.

New licenses are issued by a quota system, after review by the local unit of government and the LCC. The allocation for Jackson is 24, according to LCC rules. The city has a higher number because some licenses were grandfathered in before the allocation system was introduced in 1933, Wood said.

If a new license is available, the applicant must pay a $150 inspection fee. The permit must be renewed annually at a cost of $600.

When it comes to transferring ownership of a license, the costs basically reflect market conditions.

"They can be $50,000, $60,000 or $80,000," Wood said. "Or they could be $5,000. It just depends."

It's unclear how many taverns and licenses might be available.

"Every bar is for sale if the price is right," McDonald said.

Securing a license is just the beginning of what experts say is a very challenging business.

"It was very tough," Wert said.

Wert said small, independent operators are battered on a variety of fronts, from government imposed regulations to competition from large corporate chains with buying power and support from headquarters.

"We had no buying power whatsoever," Wert said. "We couldn't get a deal like a McDonald's (restaurant). Everything was always high for us."

An aging population and tougher laws have also had an impact.

"The drunk driving (law) is what killed us," McDonald said. "If you've got a young crowd, they don't worry about it as much. But the crowd I cater to is older; they have one or two drinks and they go."

Tougher drunken driving laws have had an impact on the industry, said Cathy Pavick, executive director of the Michigan Licensed Beverage Association.

Wert agreed, although he also said he supports the need for strict enforcement.

But insurance requirements, royalties to music companies, changing demographics and strict regulation are also having an impact, Pavick said.

"It's one of the most regulated industries out there," she said. "All these regulatory agencies are making up regulations not even realizing what other agencies are doing."

Adding food as nearly every tavern has adds another layer of regulation from the health department.

"If you're in the food business it just makes it that much tougher," Wert said.

At the time Wert sold his business, he was being pressured by the health department to install new ventilation equipment.

"You have to have the right amount of air coming into the building and going out of the building," Wert said.

The resulting, cumulative effect of various regulations can be onerous.

Yet Jackson area pub owners, whether independent or part of a chain, seem to persevere.

Wert said independents are handicapped because franchise operations can fall back on a corporate headquarters for help with legal matters, regulations and human resource problems. The independent operator is on their own.

If things are not tough already they are about to get tougher.

< New federal mandates will require states to lower the legal limit on drunken driving offenses from the current 0.10 blood alcohol content to 0.08 by 2004, Pavick said. States that don't comply risk losing federal transportation dollars.

"At what point do we regulate to destruction?" Pavick said.

Competition is another issue.

McDonald's diversity probably leaves him in a better position financially than most small independents.

Weddings and banquets on the main floor support tavern operations, which have had better days. And a four-lane bowling alley next to the bar also draws customers.

"The only thing that keeps me going now is the weddings," McDonald said. "Some of these places, if they've got a monthly mortgage payment to make, I don't know how in the hell they do it."As the bar traffic dwindled, McDonald started making changes to draw the crowds back. He added a pool table, sponsored summer athletic leagues, introduced karaoke and singles dances and recruited bands.

"I lay awake nights trying to figure out what the hell to do next," McDonald said.

Back in the 1970s, when McDonald ran a smaller bar on Page Avenue, he would sometimes get a standing-room-only crowd of 200. Now, he says, he may get 80 to 100 patrons on a good night.

When he first introduced singles dances, McDonald said he would serve up 250 patrons.

"Now you're working like hell to get 100," he said.

Wert, who now works in a warehouse in Stockbridge, said he misses the social interaction of the tavern business but not the pressure.

"I never quit thinking about it," he said. "Your mind is going all the time. You always took it home."

McDonald said the loss of a number of downtown businesses the former Gilbert Commonwealth engineering firm, for example put a crimp in his lunch time business.

"I don't know what this Consumers thing will do," McDonald said, referring to the pending construction of Consumers Energy's new headquarters building a couple blocks away.

"It sure can't hurt," he said. "But I don't really give a damn if I'm around or not." Source: Jackson Citizen Patriot