High Demand, Limited Supply for Liquor Licenses
Restaurant liquor licenses in Newport are a valued commodity, and when sold separately, they can fetch a hefty sum. Only 56 can be issued, so when a restaurant closes or is sold, there are any number of interested parties looking to make a deal.
Typically, when a business changes ownership, the license transfer is considered part of the transaction and no true price is affixed to the license. In many cases, a purchaser buys the business, the real estate and the license, and operates at the same location. It is rare when a business closes and the owner sells the license independently, thus creating a scenario where the license can move to another location.
Such is the case with A&O, Inc. which was doing business as Willy’s. On April 12, the Newport City Council was expected to consider the transfer of the license to Liquor Thames, LLC., at 282 Thames St. However, due to pending litigation, that request was postponed until the May 12 meeting.
The application to transfer originally came before the council on Feb. 8. But the council declined to consider the matter, citing ongoing litigation between the transferee and a group of condominium owners at 10 Brown & Howard Wharf. At that time, TBG Food & Beverage, LLC., which is doing business as Ciro’s Pomodoro Restaurant & Bar, was ready to purchase the license for $350,000. But when the city took no action on the approval, A&O withdrew the application and found another purchaser. That withdrawal and a new application to transfer are now the subject of the litigation.
Joseph Fitzpatrick, a principal with Fitzpatrick Team Re/Max Newport, had originally listed the A&O property, business and license as a package. “The property had lots of interest though no acceptable offers came forward,” he said. “More than 100 inquiries came in asking whether the license could be purchased separately.”
The combination of a buyer unwilling to purchase the building and continue as a restaurant, along with strong interest in only the license, convinced A&O owners John Bach-Sorenson and his wife, Tracy Bach-Sorenson, to sell the license separately.
But it’s difficult to affix a true value to a license, which complicates financing. “If you are buying a business that has a liquor license for $1 million, the bank, in most cases, will only lend you 75 percent of the purchase price, which means the purchaser needs $400,000 in cash,” Fitzpatrick said. “Not a lot of people have that amount of cash.”
Liquor Thames LLC. is associated with Alex & Ani CEO Carolyn Rafaelian, who purchased the property in 2015 for nearly $3 million. There were rumors that she paid more than $350,000 for the license. By contrast, if you were to open a restaurant in Middletown, which has no restrictions on the number of licenses that can be issued, the annual license fee is between $1,500 and $2,000, depending on the type of restaurant.
On April 12, the Newport City Council also approved the transfer of the liquor license of the former Hope Restaurant on Broadway to 8-10 Broadway, Newport, LLC., whose principals are Nicholas Giacobbi and Scott Pray. There are two more license transfers scheduled for a hearing on April 26.
The Code of Ordinances in Newport sets the type and number of allowed liquor licenses. There are 10 types of liquor licenses over which the board has jurisdiction. The board’s authority is granted under the Rhode Island Alcoholic Beverages Legislation.
Several licenses have changed hands in the past year. The owners of Stone Acre Pantry, who are opening a restaurant at the former Yesterday’s location, swapped the restaurant license from their Thames St. location with the Wharf Pub on Bowens Wharf in exchange for the pub’s beer & wine license. Meanwhile, the new owners of the former Mudville Pub (8 W. Marlborough St.) sold their restaurant license to the owners of Antonio’s Pizza By The Slice (formerly Mama Leone’s) at 150 Connell Highway, who in turn sold their beer & wine license to the new tenant at the Mudville location.
If the A&O transfer is approved, along with the transfers of the upcoming applications for the licenses of La Forge Casino Restaurant and Tallulah’s on Thames, there will be only two restaurant liquor licenses not in use. One is owned by the former Barking Crab restaurant. Chris Bicho, one of the owners of the new property, said, “While we are still in preliminary discussions with some nationally recognized restaurateurs, we will be reopening the restaurant as a seasonal ‘pop-up’ concept in May.”
The other remaining restaurant license is associated with the Rhumbline Restaurant, which was acquired by local restaurant owners Larry Silverstein (Midtown Oyster Bar) and Patrick Kilroy (The Landing). They are expecting to announce their plans soon for the location, said Kilroy.
Depending on the outcome of the litigation with the A&O license, it appears that one of the proposed new businesses will be in search of a license that isn’t presently available.
Types of Liquor Licenses and Annual License Fee in Newport
Class A – Package Stores $1,000
Class BV – (Food & Beverage), $2,000, 56 limit
Class BT – (Tavern) $2,000, 11 limit
Class BL – (Beer & Wine) $1,500, 11 limit
Class BH– (Hotel Liquor Sale in Room) $500, 3 limit
Class C – (Saloon) $800, 1 limit
Class D – (Private Clubs) $800, 16 limit
Class F – One Day Special Event, $15
Class K – White Horse Tavern, 1 limit
Class T – Jane Pickens Theater, $500, 1 limit