Strange Tales: From the Annals of the State Liquor Authority (Part I)

Originally published February 2018.

At last week's full board meeting of the SLA, a little market on the shores of Keuka Lake got its on-premises license to serve beer.  What would normally be an unremarkable bit of any day became a fascinating glimpse into the reality of the everyday.

The Agritecture Xchange: Part II

My head is still ringing from last night’s panel discussion, “Investing in a Local Food Economy & Bridging the Urban-Rural Divide.” Maybe it’s a side effect of getting out of the office and being around smart and passionate people talking about important ideas …

Ariel Lauren Wilson, editor of Edible Brooklyn, seamlessly filled in for Meg Savage and moderated a fascinating dialogue that focused on how resources (i.e., money, land, people and their products) are valued and distributed throughout the various levels of the food system - and how those allocations should be changed. The panelists — Ethan Roland Soloviev from HowGood; Meg Christman from Greene Grape Provisions; Lee Davies from FoodFutureCo.; Jeremy Kaufman from Propagate Ventures; and Jesse Voremberg from Local Farms Fund — touched on many areas like land access, transparency in the food chain, and the role of farms throughout the foodshed.

It was generally a lively and engaging discussion, but at times it was straight-up intoxicating: I started to feel lightheaded when talk turned to land trusts and cooperatives and got goosebumps from the words “food hub.” You might say, “Dawg, I think something’s very, very wrong with you,” and honestly, you’d be right.

Among many other things, what’s wrong with me is that I don’t do nearly enough of this — I don’t write nearly enough about my ideas and experiences in food and policy, don’t talk nearly enough to the people who are already doing the dirty work of making our food system make sense.

So, that’s it — I’m just going to keep doing this stuff. I hope you’ll join me.

The Agritecture Xchange

The Agritecture Xchange

Tonight, I’ll be attending the panel discussion “Investing in a Local Food Economy & Bridging the Urban-Rural Divide” from 6:00-8:00pm at Company, a coworking space near Grand Central (I think there are still tickets available). It’s moderated by Meg Savage of Edible Manhattan and includes speakers discussing food production, retail procurement, tech ventures, and investing. If you see me there, come say hi! If not, stay tuned here for more from this week at the Xchange…

Dumb Lawsuit of the Day

While the intersection of alcohol and politics is usually a tempest of sound and fury, the everyday encounters at that crossroads seldom rate as newsworthy beyond the margins of a local police blotter.  Occasionally, though, the stupid finds its way into the official record.

From Gothamist:

A Philadelphia accountant feels "humiliated, degraded, victimized, embarrassed and emotionally distressed" after he was refused service by a West Village bar on account of his pro-Trump hat. Greg Piatek, 30, claims he was denied drinks by multiple bartenders and servers at The Happiest Hour on January 28th because he was wearing a red "Make America Great Again" cap.

Now, as he suffers from "anxiety and severe emotional distress," Piatek is suing the bar and owner John Neidich for "egregious, unlawful, and discriminatory conduct."

Then the stupid starts to weep.

In his lawsuit against The Happiest Hour, Piatek recalls being shocked by the ordeal because of his "sincerely held set of beliefs in which he felt it was necessary to wear a particular hat in remembrance of the souls who lost their lives and as a symbol of freedom/free speech."

"Ignoring me because I'm wearing the hat is ridiculous," Piatek told the New York Post, which deems the incident discrimination "with a liberal twist." Attorney Paul Liggieri, who is representing Piatek in New York Supreme Court, told the tabloid that being kicked out of the bar for his MAGA hat was Piatek's "saddest hour."

The hospitality world is fraught with real challenges from within and from without.  For all of the legal and regulatory burdens to which the service industry is subject, this brand of baseless lawsuit is an unnecessary drain on the time, money and goodwill of small businesses. For hospitality businesses in particular, where every customer is a critic, operators bend over backwards three times for their guests just to keep the doors open.  

It's not my place to pass judgment on whether or not the staff in this case acted appropriately. However, when customer dissatisfaction spills into the courthouse, I'll stand up against that kind of garbage every day.

Aside from asserting a claim for Intentional Infliction of Emotional Distress claim, which is plainly ludicrous, Piatek (through his attorneys at the Derek Smith Law Group) insists that wearing his hat was not political speech but an expression of his "creed." By denying him service, Piatek claims that the The Happiest Hour violated New York human rights laws prohibiting discrimination on the basis of his "creed." Again, this is laughable.  

Obviously, wearing a hat bearing a slogan from a political campaign IS political speech.  What's really galling is Piatek's claim that his hat is "a symbol of freedom of speech[...] a symbol of his creed."  Creed, roughly translated to legalese, means religion. Is this alternative approach to language just a pathetic attempt to add color to a frivolous lawsuit or does Piatek sincerely believe that Don Jon is the Messiah and "Make America Great Again" is the Golden Rule? Either way - sad(!).

This case should be laughed out of court and Plaintiff's counsel ought to face sanctions - obviously frivolous, publicity-seeking lawsuits like this are the worst of our profession.  This Office is committed to serving small businesses in the hospitality world and that includes swiftly handling nuisance suits so operators can devote their time and energy into doing what they love - serving others.

You can read the poorly-drafted complaint, which reads at times like an excerpt from a Bill O'Reilly novel, here (via Scribd).

The Basics: Key Money Deals

There are about 24,000 food service establishments operating in New York City.  In such a highly competitive industry, it’s no wonder that the failure rate for these businesses is so high. With new openings and closures happening every day, the market for fully built-out restaurant spaces is abundant.

If you’re thinking about opening a restaurant in NYC, these turnkey options may be very attractive.  Think about it: most of the work has already been done.  The current tenant has already negotiated a lease, built out the space, purchased equipment, and may have obtained a liquor license.  For an operator, this may seem like a dream come true. However, there are many aspects of a “key money” deal that must be considered, lest your dream quickly become a nightmare. 

What the heck is key money anyway?  

Basically, key money is an amount paid to the existing tenant to buy them out of their lease.

In addition to getting the seller to assign over its lease, the amount paid will usually entitle the purchaser to all of the furniture, fixtures and equipment within the restaurant. 

A premium may be paid if the seller has a full liquor license, as the purchaser may be able to get a temporary permit to serve cocktails while its retail application is pending.

Is it a good deal?  

A key money deal will make sense when the existing lease terms are favorable.  However, if the terms are suboptimal, they will have to be renegotiated, which may negate some of the benefits that made the space so attractive in the first place. 

  • For instance, if there are only 3 years left on a 10 year lease at a below-market rent, does it make sense for you to take it?  You can ask the current tenant to renegotiate the lease, though you risk losing that favorable rate in the process. 
  • Can the lease even be assigned?  Most leases have provisions that require landlord approval for assignments and some contain outright prohibitions.

At the end of the day, the key money price is usually negotiable.  It’s important for both buyers and sellers to have experienced counsel help them understand the nature of these deals, the current market and the various values that affect the price.

Is it what you want?  

Usually, someone looking to open a restaurant will want to do it on their terms, installing their own concept and design.  Does the existing space fit with what you want to do or will you have to renovate?  Significant alterations, particularly those involving electrical or plumbing work, can be costly and require permits that take time to issue. 

While the lease and location may be beneficial, a delay in opening due to construction may eat into your budget and, consequently, any advantages of the deal.

Can I get you a drink?  

In some situations, a purchaser of an existing restaurant with a valid liquor license may be able to get a Temporary Retail Permit (TRP) to serve alcohol.  A TRP, contrary to popular belief, is not a transfer of the seller’s liquor license; it is a special permit issued by the SLA that allows a purchaser to serve alcohol while its retail application is pending.  

There is no guarantee that, having been issued a TRP, the purchaser will be granted a full liquor license.  The purchaser will have to go through the same application process as every other new applicant, including notification of the local community board, compliance with the 200 & 500 foot rules, and disclosure of financials.  In addition, the TRP will only permit the purchaser to operate the same way as the seller — if the seller’s license allows only beer & wine sales, the purchaser will not be able to serve liquor.

Make no mistake, a TRP can be very valuable to a purchaser: the business can execute its full concept and reap the high margins on liquor sales while the full application is pending.  That extra revenue can be crucial in the first few months of operation.  

What now?

There is a lot to think about when making the decision to open a restaurant.  A key money deal is one common avenue to acquiring a location, though it's certainly not the only way.  To ensure that you choose the best path to success in the industry, it is vital that you retain the advice and services of expert legal counsel to guide you through the process.

Of course, my door is always open to continue the discussion!