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The Impact of Liquor Licenses on Restaurant Business Sales© |
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Read these informative articles from our unique SMART BUYER PROGRAM© A Seller's Dictionary of Restaurant Brokerage Terms How Much Is a Restaurant Worth? Restaurant Lease Considerations The Impact of Liquor Licenses on Restaurant Business Sales Local SBA Lenders and Loan Brokers Essential Ingredients for Restaurant Business Valuations
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As Business Brokers who specialize in the sale of restaurants, we, more often than not, are involved in transactions where the liquor license is an integral part of the sale. There are three grades or levels of licenses that we primarily deal with and two of the three can have a material impact on the pricing of the business. Here is some basic information on Arizona liquor licenses and some information on their values and impact on the sale of a restaurant business. Each has its own series number and that is the way that they are referred to in the restaurant and bar business. Series # 6 - This is the true bar license. A #6 liquor license carries no requirement for the sale of food, the opposite of the true restaurant liquor license. This license can be held as personal property and bought, sold or traded amongst individuals and companies. The license can be assigned to any location as long as the city, municipality or county zoning and other location requirements can be met - the net effect of this is to limit the number of locations that are qualified. The #6 license, at the current time (0ctober 2006) has a value of $100,000.Series #7 - This is the license commonly referred to as a beer and wine license. While a #6 permits the establishment to sell any alcoholic beverage, the #7 establishment is restricted to just beer and wine. This license permits both on-premise and "to go" sales. It is commonly used by wine bars and by small restaurants. In Maricopa County, a #7 license currently (October 2006) can be purchased for $12,000 to $15,000. Please note that this license, just like a #6, can be bought and sold privately amongst individuals and companies and can be placed at any location that meets local ordinances. Also, there is no requirement that food be sold. Series #12 - This is the true restaurant license. In order for an establishment to operate with a #12 license, it must have at least 40% of its total sales in food. Less than 40% food sales may very well create the requirement of a #6 license, which at the very least will be an additional cost of $80,000 to $90,000 to the business. Significant to this license is that it is totally location specific, it cannot be bought sold or traded privately, and it cannot be moved to another location. No "to go" sales are permitted. Total costs for this license will range from $3,500 to $5,000 for the issuance of the license, with the fees including county and city fees, investigation costs and issuing costs. Every time a restaurant sells with a #12 license, a new #12 is issued-- a rather simple process. During the time that a new license is being issued, the new restaurant owner will operate under an interim permit. In general terms--and please accept that there are exceptions to every rule--a #6 and a #7 license will have an impact on the selling price since they are personal property just like furniture, fixtures and equipment. A #12 license will have no monetary impact on the sale. The true value of a #12 is the acknowledgment that the premises can be licensed and as the result of the interim permit process there will be no interruption of liquor sales in the restaurant upon the sale of the business. |
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© 2006"The Restaurant Brokers"