How liquor licenses in Centre County get distributed
A debate last month at the State College Borough Council meeting over whether to approve a liquor license transfer into the borough stirred up community interest over how liquor licenses get distributed through Pennsylvania counties.
The short answer? It’s competitive and expensive.
The long answer? Well, it’s complicated. Each Pennsylvania county has a fixed amount of liquor licenses that can’t be transferred out of county. The only workaround is the relatively new Act 39 of 2016, which allowed the Pennsylvania Liquor Control Bureau to resurrect expired or “zombie” licenses from the year 2000 onward and auction off 25 twice a year to the top bidders.
“We’re very cognizant of the value these licenses have in the secondary market and we’re very careful ... when it comes time to determine which licenses we put in the auction,” said Shawn Kelly, spokesman for the PLCB.
Within counties, each municipality has a quota as part of the state liquor code that’s based on population — one liquor license for every 3,000 residents, said Kelly. The state tries to track each liquor license by county and municipality, but “it’s constantly changing and we do the best we can to stay on top of it,” he said.
Where are the liquor licenses?
In Centre County, almost 75% of restaurant liquor licenses are concentrated within the Centre Region: State College Borough and College, Patton and Ferguson townships, according to the PLCB database. There are some municipalities that have zero restaurant liquor licenses, despite having breweries or distilleries, which operate under different licenses. Hotel liquor licenses can also offer workarounds to the traditional restaurant liquor licenses — they don’t have the same quota and restaurants can operate in the same building as a hotel to be under one.
Two recently approved transfers — one from Moerschbacher Enterprises in College Township to the planned Queenstown restaurant in State College and another from Hofbrau in Bellefonte to the Sheetz at 765 Benner Pike in College Township — underscore some of the central themes in Centre County’s liquor license market.
The first is that Sheetz Inc. owns the most restaurant liquor licenses in Centre County, at five currently, with four transfers pending approval by the PLCB. In fact, Sheetz has 161 stores in Pennsylvania that sell beer and wine, with 22 applications pending before the PLCB, according to liquor law attorney Mark Kozar, who represents Sheetz. The second is that liquor licenses are overwhelmingly concentrated in the Centre Region — of 60 active restaurant licenses, 44 are located in an area with a State College mailing address.
Additionally, State College Borough is 36% over its liquor license quota — there are currently 19 active restaurant liquor licenses in State College, and population based on the census count say there should only be 14. In total, there are 48 retail locations in the borough that serve alcohol, according to borough Assistant Manager Tom King.
But Kelly said most counties and their municipalities are well over the liquor license quota, and the PLCB will not take licenses away from businesses in those places. That’s because the quota system was put in place in the 1930s, and existing liquor licenses were grandfathered in, he said. The PLCB also has no control over intermunicipal liquor license transfers, he said, which are up to the municipal governments receiving the transfer applications.
They can, however, deny an application or a license renewal if the business has a history of disruptions or code violations, he said.
BEHIND OUR REPORTING
Why did we report this story?
A recent debate over whether to allow a restaurant to transfer a liquor license into State College Borough piqued the interest of community members, several of whom asked questions about how Pennsylvania liquor laws work and how liquor licenses are acquired in Centre County. That got us thinking about how these laws affect our communities in Centre County and why we were seeing the trends we found in data from the state.
‘Unfortunate for independent, small business owners’
In Bellefonte, which currently has three active restaurant liquor licenses, several restaurants have turned to Bring Your Own (alcoholic) Beverage setups due to customer demand, the high cost of liquor licenses and competition from State College.
Dustin Smith, co-owner of State Burger Co. in Bellefonte, said he and his business partner looked at getting a restaurant liquor license, but the competitive and pricey market in Centre County — largely driven by State College’s downtown — deterred them.
“When we were looking at a liquor license, what I came to realize is the competitive pricing ... it’s really expensive for this area, and so I think you find the people with deeper pockets are the people that are getting those liquor licenses,” he said.
Liquor licenses in Centre County go for anywhere from $200,000 to $500,000, business owners have said. Two recently auctioned “zombie” licenses in Centre County fetched $307,500 from Sheetz Inc. in 2016 and $325,419 from Weis Markets in 2017.
Central Pennsylvania Business Journal found in 2017 that five large supermarket and convenience-store chains bought more than 60% of licenses sold in PLCB auctions since 2016. The two chains that made up 40% of the winning bids were Sheetz and Giant Food Stores LLC.
“I think that is unfortunate for independent, small business owners, because, you know, we can’t really compete with that from a price standpoint,” Smith said.
In the past several years, liquor licenses once owned by small businesses in Centre County have been purchased by chains. Stover’s Tea Room in Milesburg closed in 2017, and sold its liquor license to Snappy’s Convenience Store and Gas Station across the street.
The Sheetz at 820 S. Eagle Valley Road in Wingate applied to transfer a liquor license in 2018 from the now closed Brenda’s Tavern in Boggs Township, but it was denied by the PLCB after Bald Eagle Area School District Superintendent Jeff Miles protested against the store selling alcohol near two schools. Sheetz has appealed that decision and the case is ongoing.
And in May, Sheetz got a liquor license transfer conditionally approved for its South Atherton Street store at 120 Southridge Plaza — from the former Philipsburg Super Bowl in Rush Township, reported StateCollege.com. That location is pending approval for the construction of a seating area.
Smith said he isn’t sure the liquor license market in Centre County will swing in favor of small, independent business owners who aren’t as established in the community. But he does have some hope.
“I think the trend is going to be looking for alternatives like teaming up with some breweries or doing BYOB,” he said. “But at the same time, there is something to be said about the percentage of sales that a liquor license brings in.”