Local Licensing Boards

                Local licensing boards have the responsibility of managing the liquor licenses for a municipality in Massachusetts.  This means that instead of having to deal with one regulatory body, you will have to interact with multiple based on the towns or cities in which you do business.  The importance of the people on these boards cannot be understated.

                The regulatory system in providing off-site liquor licenses in Massachusetts is complex.  From all of the licenses needed from the state Alcoholic Beverages Control Commission (ABCC), to the federal TTB, they have the local level as well.  The ABCC and the TTB are pretty straightforward, you fill out a form, pay the fee, and as long as there are no red flags, you’ll get approved.  If you’ve been convicted of a felony,  that may cause some problems, but for most people this is not an issue.  At the local level, though, that’s where things become more nuanced.  It isn’t about filling out a form or paying a fee and meeting certain criteria.  The local licensing boards (LLB) are tasked with taking into account qualitative factors in determining who should receive a liquor license.  The problem with qualitative is that it can’t be backed up.  It can either be a person’s hunch or feeling.  This isn’t saying that those are not always unwarranted, but no one knows.  It ends up being a crapshoot as to whether or not they approve your permit.  The problem with this is that this is your business.  If they don’t approve the permit, then you lose all of the time and effort put into deciding on that location.  They hold all the power over your business.

                Recently, we heard of a LLB delaying an approval for a new liquor store in a fairly large Massachusetts city.  There were two reasons given for the delay were that the store may be too close to another liquor store and that one of the board members was not there.  I happen to know the city, and within that same area, there are about 10 restaurants with on-site liquor licenses.  The second reason was that one of the board members didn’t show up.  So, irrespective of whether the applicants were ready, this license was not approved.  They had to wait until the next meeting.  Then, there is no guarantee that the same objection about location will be raised again.  At that point, it is either time to start over somewhere else, or work with the board for approval.  Either way, it increases the delay and assures you of having no customers.


Massachusetts S.2033

     The recent signing of Massachusetts S.2033, which was signed into law by Governor Deval Patrick on November 22, 2011 will bring about changes to the retail alcohol industry in Massachusetts. These changes will be focused on increased competition and consolidation. Competition will come from not only grocery chains, but also other liquor stores with successful business models that seek to expand. These competitors will seek to consolidate smaller, less successful retail locations.
     A lot of attention has been paid to the increased competition from grocery chains, as they have been the main adversary of retail liquor locations over the years. The ability for grocery stores to take lower margins on alcohol due to their grocery business, as well as one-stop shopping make them a cause for concern. The new bill will allow them to accumulate even more liquor licenses and realize more economies of scale. Grocery stores are becoming more and more sophisticated in retail liquor experience and will continue to take market share from smaller stand-alone liquor outlets.
     Another area for concern is the anticipated emergence of “mini-chains” of liquor stores. These would expand in size as the restrictions on the number of licenses per holder are eased. Owners of well established retail liquor locations will seek to expand their operations. A well run business that previously was limited to only three operations by law can now become larger and take advantage of the increase in scale. In addition, they will be making plans for expansion through 2020, when the number of licenses increases to nine. This will inevitably lead to consolidation in the number of owners of retail locations. The question that arises here is whether they will be new locations or existing stores. New locations carry risk in terms of drawing customers, whereas existing stores will have a customer base built in. It will ultimately depend on the price that the existing owner will charge for the location and access to their customers. The “mini-chains” will be as formidable a competitor as the grocery chains in the future.
     All competitors, whether grocery stores or the new breed of chains, will squeeze profits on all outlets. The revenue side will be compressed by market share loss, and the cost side will increase by additional marketing. Therefore, it is imperative that retail liquor outlets take action to understand their business and seek to minimize their costs and maximize their revenue. D1R consulting is here, ready to assist you in this endeavor. We offer the flexibility to work with you to address these challenges on your terms to ensure your business is the most successful it can be.