From food halls to special laws, restaurants and landlords get creative to avoid paying $600,000 for a liquor license - The Boston Globe (2024)

And for that, you can thank the Massachusetts Legislature.

Four years ago, when the Speedway was under construction, lawmakers created a special liquor license just for this project. It enabled the developer to get around the strict cap on how many establishments can serve booze in Boston by allowing the Speedway to share one license across its various tenants. That meant innovative entrepreneurs could open there without shelling out the six-figure price tag to buy a license of their own — a dream made real.

“Oh, I actually cried,” recalled Koji owner Alyssa DiPasquale. “What a relief.”

It’s one example of how developers, landlords, and restaurateurs across Boston are finding workarounds to the extreme scarcity and expense of liquor licenses that make it hard to open new restaurants and bars. It’s also another example of the baked-in inequities that plague the patchwork license system.

Some ask their state reps to write special legislation for individual projects. Others migrate to deep-pocketed food halls that allow multiple establishments to share one liquor license. Still others, with the help of savvy lawyers, have multiple, adjacent bars that piggyback on a single license. One restaurant group, for example, operates six distinct but physically connected businesses in Downtown Crossing — from a pub to a sushi bar — on one liquor license.

It’s a smart and creative strategy, said Jesse Baerkahn, whose real estate advisory firm Graffito has long played matchmaker between restaurants and landlords. But it also rewards those with the connections, or the cash, to work around a convoluted system.

“It’s the same usual suspects who have figured it out, who have access to capital, access to power,” said Baerkahn, whose firm worked on the Speedway project. “That’s the problem with the system.”

These elaborate strategies are necessary because the Legislature has long limited the number of liquor licenses that can be issued in most cities and towns. Boston hit its cap roughly two decades ago, just as the Seaport District was being developed. There are just under 1,200 licenses to pour alcohol, according to the Boston Licensing Board. In most cases, acquiring a license for a new bar requires buying one from someplace that has closed. And the asking price for an unrestricted license to pour wine, beer, and co*cktails can often top $600,000.

That is pushing young talented chefs to open restaurants outside of Boston, where licenses are cheap. That, in turn, is stifling the potential of Boston’s restaurant and nightlife scene.

But with the right connections, there are ways around that cap.

In 2012, the Massachusetts Port Authority sought legislation to create an unlimited number of licenses at Logan Airport, and today it has 47 liquor licenses between restaurants and airline clubs — more than 40 percent of all the licenses in East Boston. An array of smaller operations have similarly eluded Boston’s license limit by successfully petitioning the Legislature — everyone from the Irish Social Club of Boston in West Roxbury to the Outward Bound Education Center on Thompson Island to South Bay Shopping Center in Dorchester.

Typically, these licenses are restricted by location. They must be approved by city and state liquor boards. They can’t be sold. They go back to the city when no longer needed. Still, they’re coveted by restaurateurs as serving alcohol is a game-changer in the low-margin, highly competitive hospitality industry.

Still, even some big developers get frustrated by a system that favors those who know how to navigate it. It’s murky, for no good reason, requiring help from a cottage industry of specialized lawyers and brokers.

“It’s kind of ludicrous,” said Dick Galvin, a veteran Boston developer and founder of CV Properties. “You’ve invested $150 million to $160 million in a hotel, but you’ve got to go to the black market to find a liquor license.”

These days, Galvin’s working on Dorchester Bay City, a $5 billion mixed-used development on the former site of the Bayside Expo Center. It will take a decade to build, but he’s already thinking about how to get liquor licenses, especially since he and his partners pledged to create affordable spaces for local entrepreneurs of color.

“One thing developers hate more than anything and what investors hate more than anything is uncertainty. That’s what’s baked into this whole liquor licensing thing,” Galvin said. “In the end, you figure it out, but it’s unnecessarily a challenge.”

So Galvin, too, is considering asking the Legislature for licenses for Dorchester Bay City. For precedent, he just needs to look across the Southeast Expressway, to South Bay.

In 2017, South Bay owner Edens was in the midst of expanding its sprawling shopping center to include a number of restaurants. Just a few years earlier, the Legislature had issued a batch of 70 new licenses for Boston. Still, Frank Baker, the then-city councilor whose district includes South Bay, wasn’t taking any chances so he filed a home-rule petition for 15 licenses just for the complex.

“I knew that they needed liquor licenses,” Baker recalled. “And all the other ones were going to be gone.”

The number was more than the center needed, Baker said, but he figured it would get negotiated down as the measure moved through the Legislature. Instead, it sailed right through. Today, only about a half-dozen are in use, mostly by chains including the AMC movie theater, 110 Grill, and Kura Revolving Sushi Bar.

But the special licenses did help bring at least one locally owned establishment to South Bay: The Pearl, a seafood restaurant launched in 2021 by Black entrepreneurs who at the time struggled to get a bank loan.

“It was definitely a draw,” said The Pearl’s director of operations Luther Pinckney. “It was certainly the only way we were going to be able to open.”

The low-cost license made a big difference in helping The Pearl get off the ground, Pinckney said. Now, with a proven concept, its owners are opening a second location at Boston Landing in Brighton, and this time they have the means to purchase their own liquor license.

Beyond legislation, there are other ways that restaurant owners and landlords are making the most of scarce licenses.

Consider High Street Place Food Hall, which opened in 2022 and is home to about 20 food and drink options on the ground floor of a downtown office tower.

Real estate firm Rockpoint, which helped developed High Street Place, spent $425,000 in 2019 to buy the liquor license of a closed Uno Pizzeria & Grill on Huntington Avenue, according to data from the Alcoholic Beverages Control Commission. Now, at least five spots at the 200-seat food hall — from chef Tiffani Faison’s Bubble Bath to an outpost of Fuji sushi — use that single license.

Legally, the setup is similar to how a hotel operates restaurants, room service, and ballroom banquets all on a single liquor license. It carries some risk — should one establishment commit a violation, such as serving underage patrons, the whole place could be cut off. Yet there’s an upside in that it lowers the barriers to entry for chefs and bartenders who can’t afford their own liquor license, said Adam Barnosky, an attorney who handles food hall licensing in Boston.

“They can test out the market and make a name for themselves and go to the next level,” he said. “It has been great for the industry.”

Food halls aren’t the only ones that have figured out how to make the most out of a single liquor license. Multiple establishments can operate on one permit, as long as they are physically connected and have the same owner. Think bars connected to restaurants like Krasi and Hecate in the Back Bay, and Ciao Roma and Farmacia in the North End.

Brian Moy first saw the potential of that approach a little more than a decade ago when restaurateur Barbara Lynch opened Italian eatery Sportello, co*cktail bar Drink, and fine-dining restaurant Menton in three adjacent locations in Fort Point. Moy initially assumed they operated on three liquor permits but later learned it was just one.

“A light bulb went off,” recalled Moy, whose family has owned the popular China Pearl restaurant in Chinatown since the 1980s. “My gears started turning. How come they can do it?”

Moy said it took him a year to find a lawyer who could replicate what Lynch had done. His family operated a cafe on the floor below China Pearl on Tyler Street. Moy took over that space to open Shojo Boston, which serves modern Asian cuisine and co*cktails, and shares the all-alcohol liquor license held by China Pearl upstairs.

Perhaps no one has been more adept at opening establishments next door to each other than Babak Bina and Andy Cartin. In 2011, they opened the pub JM Curley, then a speakeasy steakhouse, Bogie’s Place, followed by co*cktail lounge The Wig Shop, in 2022 — all in Downtown Crossing on Temple Place. This year, with a new partner chef Jamie Bissonnette, they added three more spots: Korean restaurant Somaek, a Tokyo-style listening bar Temple Records, and Sushi @ Temple Records.

Their row of restaurants and bars — all sharing one license — has injected much-needed life into a part of downtown that gets dormant once office workers go home.

At a city licensing hearing last October, Steve Miller, the group’s veteran liquor license lawyer, explained how Bina asked him to come up with a solution so he wouldn’t have to buy another license. In this case, a rear passageway and an additional connection through the basem*nt enabled Miller to find a way meet the requirement the establishments be connected.

The proliferation of such arrangements, in part, arises from a Boston Licensing Board that encourages out-of-the-box thinking as a way to address the shortage of licenses.

“Bring us your ideas,” said board chair Kathleen Joyce. “We will help you make it happen.”

Still, it’s an approach that works best for experienced operators and for ones that have the resources to scale across multiple spaces — not so much for a mom-and-pop restaurant.

More typical for the less well-connected is the waiting game. That has been the experience of Will Isaza, who has been on a years-long quest to open a bar in East Boston where he grew up. An award-winning bartender, he is opening a coffee shop instead — Café Gloria, named after his mother — because he can’t afford to buy a liquor license.

Isaza looked into it, but the cost exceeded the build-out of his 40-seat space. Now the plan is to turn the cafe into a bar when a low-cost liquor license becomes available. A bill is moving through the Legislature to create some 200 new licenses, including some in East Boston.

“It’s definitely an antiquated way of doing business,” he said.

For the longest time, the nonprofit developer behind the Speedway — Architectural Heritage Foundation — wasn’t sure whether its tenants could afford liquor licenses. But it all came together because the Speedway sits on state-owned land in the district of Representative Mike Moran, who has played an outsized role in shaping Boston’s liquor license policy at the State House.

The Brighton Democrat carried a bill in 2019 to create a license for the Speedway, and by the following year it was signed by then-governor Charlie Baker.

In a statement, Moran, who has since become the House’s second most powerful Democrat, called the Speedway a “wonderful example of government stepping in and providing the support necessary to revive and refresh a historical piece of Allston Brighton history that otherwise would have continued to fall into disrepair.”

For Speedway tenants, having a special license has been life changing. Without it, for example, Ren Wheeler, who owns Rite Tea & Espresso Bar, would have looked to open on the North Shore. She now operates a cafe that turns into a Scottish whisky bar on Friday nights.

“It’s really exciting,” she said. “It is really like a dream come true.”

A dream come true for the savvy and lucky few, but still out of reach for so many more.

Shirley Leung is a Business columnist. She can be reached at shirley.leung@globe.com.