So restaurants make half the profit bars do on their liquor licenses but they have to pay twice as much – yeah that makes a lot of sense;

Restaurants in Sioux Falls that want to serve liquor will have to fork over a lot more money to get a license. 

The city council raised the licensing fee to $260-thousand dollars Monday night, that’s twice the amount bars pay. The ordinance also limits liquor sales… a restaurant can’t make more than 40% of its profits from alcohol.

As councilor Costello points out the licenses should be a yearly fee like they are in Nebraska so you are not stuck with an expensive piece of paper when you go outta business. (of course, the Gargoyle Leader editorial board thinks it is a great idea) The pricetag is also a barrier. It is pretty obvious that a smaller locally owned restaurant cannot afford such a pricetag only allowing crappy franchise restaurants to buy up the licenses or gigantic grocery store chains. This of course is a competition killer. I have often said the best food in town is served in locally owned restaurants (Minervas, Sushi Masa, Touch of Europe) but only one of them has a liquor license.

Rumor has it that the law is still flawed anyway, it also includes liquor stores, so when the last time the licenses came up for sale, rumor has it, a regional grocery chain bought them all up so they could squash out local liquor store competition.

 Just another dumb law on South Dakota’s books that leaves the little guy out in the cold.

10 Thoughts on “Liquor licenses in South Dakota need to change

  1. Ghost of Dude on March 10, 2009 at 6:43 am said:

    It is pretty obvious that a smaller locally owned restaurant cannot afford such a pricetag only allowing crappy franchise restaurants to buy up the licenses or gigantic grocery store chains.

    Exactly. What is the hang-up with allowing restaurants to serve liquor? Why is it that a liquor license must cost $260k and still carry restrictions?
    If you’re going to put restrictions on it, it needs to be cheaper. I say $10k/year is probably fair.
    When they were originally debating it, they seemed afraid that they’d make current LL owners mad by devaluing an asset they could sell second hand on the gray market. That has to be the stupidest logic I’ve heard yet out of the legislature.

  2. l3wis on March 10, 2009 at 6:50 am said:

    It’s all about protecting their own, you know that Dude. The $260K is actually pretty low. During the meeting they were discussing the price, I think the city rep said their was one license that sold for $350 K last year.

  3. Ghost of Dude on March 10, 2009 at 7:37 am said:

    Protecting their own is one thing. but why the barriers to entry for local business owners? Mama’s Ladas started up for a fraction of what a liquor license costs, and they’re packed all the time. They’d probably be able to squeeze a lot more money out of that tiny space if they could make real margaritas.
    The only people protected by the high cost of a license are bland, generic chain restaurants which are largely corporate owned. The local economy doesn’t see nearly as much return from a new Applebee’s as it does from a successful local establishment.

  4. l3wis on March 10, 2009 at 8:14 am said:

    I agree – we are in franchise Hell. As I always say, over 400 restaurants in Sioux Falls and no place to eat.

  5. Ghost of Dude on March 10, 2009 at 8:58 am said:

    For date nights, Mrs. Dude and I usually choose between Mama’s Ladas, Sanaa’s, TOE, or the Diner. We may check out Grill 26 for the next one.
    The chains all seem the same – either a generic burger and chipotle-jack-daniels-deep-fried pizza shooters place, or a steakhouse with a theme (Texas, Australia, Northwoods, etc).

    What I think would do well here is a comfort food restaurant. All your old favorites done right – meatloaf, mac n’ cheese casserole, short ribs, pot roast, chipped beef… hell, even tater-tot casserole.

  6. l3wis on March 10, 2009 at 9:12 am said:

    “chipotle-jack-daniels-deep-fried pizza shooters place”


    The Grille is kinda a upscale, ale carte comfort food place. Come for plated brunch on Sat or Sun, 9-3. Good stuff.

  7. Randall on March 10, 2009 at 12:52 pm said:

    I cannot understand why our legislature is SO dead-set against small business. I agree, L3wis, “franchise hell.” But – as I said – it makes NO sense. Someone please explain to me why giving a small, start-up, original restaurant a liquor license at a reasonable rate is a bad thing for South Dakota?

  8. l3wis on March 10, 2009 at 1:28 pm said:

    Protectionism. That’s how small business works in South Dakota. Look at what Tim Kant did DT when a bar wanted to move in across the street from him, he did everything in his power to stop it. I heard J & L did the same thing when an Easyrider franchise tried to open in town to.

  9. Ghost of Dude on March 10, 2009 at 2:20 pm said:

    Does Tim not understand that bars close to eachother actually provide more business to both?
    Good Lord, some of our business people are nothing more than backwoods good-old-boys who wear $200 jeans and hipster glasses.

  10. l3wis on March 10, 2009 at 2:33 pm said:

    He doesn’t get it. This is the same guy who ran across the street to get into a fight with a 21 year old walking out of Lucky’s because he cocked off to him. Real professional.

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