Hoboken's Liquor License Rule Stifles Innovation

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In the 1990's many post-college students were arriving in Hoboken, and new bars were opening to meet this demand. Citing quality of life issues, Hoboken's city leaders decided to enact a new rule preventing any new bar or restaurant (with a liquor license) to open within 500 feet of an existing bar or restaurant. The theory was that new bars could open in less densely populated parts of Hoboken, rather than a crush of bars along Washington Street, or near the PATH station.

               Before this law was enacted a liquor license in Hoboken cost about $30,000-50,000, and the city had about 140 liquor licenses sold to individuals, some were active and some were inactive. By creating the law, it drove up the costs for existing liquor licenses. Small Mom & Pop bars were able to command prices of $250,000+ to transfer their liquor license, since a new bar couldn't just open next door to them.

               By creating the law it kills the incentive to have to create a good product. One of the problems with socialism is that it prevents an individual from trying to go above and beyond rather than keeping the status quo. If a long established restaurant has a liquor license, they really have no fear to make a better product, knowing that someone else really can't challenge them. New restaurants can't open in town unless they have millions of dollars to spend, which is why you have mostly seen chain restaurants open. How many new and innovative restauranteurs have picked Jersey City to open their new establishments rather than Hoboken in the last 10 years?

                Let's say that you are an existing bar, who has been open for 10 years, and rent from a landlord, maybe you have a name like "Sorthern Noul". You make a good product, the patrons are loyal and you are good tenants. But the landlord wants to raise your rent by 50%. What, exactly, are your options? You built a product that your neighborhood tenants enjoy. You can move, but have to find a place in Hoboken that isn't 500 feet from another bar or restaurant - not exactly an easy task. Does the bar move to a desolate part of town, hoping, that their old regulars show up?

                Another option would be for Hoboken to endorse Assemblyman John Burzichelli's bill that is before the NJ Legislature. It creates a new kind of liquor license that allows restaurants to serve beer and wine. Seems like a good way to attract new restaurants that wouldn't be a direct threat to bars and other restaurants that could still serve hard liquor. 

                There is a special meeting on Monday September 26th to hear from the public in City Council. I encourage for your voice to be heard.

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This page contains a single entry by Furey published on September 23, 2016 12:22 AM.

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