Hitting the bottle: neighborhood restaurants adding liquor

Southwest neighborhood restaurants such as El Meson, Little Tel-Aviv, Macchu Pichu and Caf Bicko are following the recent business trend in Minneapolis: seeking a liquor license to stay competitive and boost business. A veteran city licensing inspector, Ken Ziegler, said that although he can’t provide specific numbers, over the past few months there has been a significant increase in applications for liquor licenses.

What’s driving the trend to the bottle?

Ziegler said a significant factor is the city’s recent zoning-law changes. Four years ago, he said, the city passed a charter referendum making restaurants located in residential areas — such as El Meson, 3450 Lyndale Ave. S., and Caf Bicko, 4501 France Ave. S. — eligible to sell liquor if approved for a license.

Ziegler said the city also relaxed parking requirements for businesses with liquor licenses last January, removing special standards for places serving alcohol. Before January 2002, businesses selling booze needed one parking space per 10 customers of capacity, with no exceptions; the current zoning code requires restaurants to have 30 percent parking — but allows variances to reduce the requirement.

For entrepreneurs, profit Beyond new regulations, Ziegler said the recent liquor-license rush is most likely linked to the current economic slump, which has the twin effect of cutting profits and increasing competition. "When the economy goes down, entrepreneurs go up," he said.

Teddy Nachmias, owner of Little Tel-Aviv, 3238 W. Lake St., said a liquor license will boost his new restaurant’s profits, because a lot of people like to have a glass of wine with their meals.

Nachmias, who only serves kosher beer and wine, said having a liquor license also gives him a competitive edge he wouldn’t have otherwise, because his is the only vegetarian restaurant serving kosher wine.

Fernando Palomino, owner of Peruvian restaurant Machu Picchu, 2940 Lyndale Ave., in the Wedge neighborhood, recently sought an upgrade in the liquor license from a wine and beer license to a full liquor license (one that allows hard liquor such as gin and vodka to be served).

Palomino said he wanted to upgrade initially so he could serve a native liquor called Pisco, but he said the upgrade would also help him better compete with other full-liquor restaurants in his Lyn-Lake area. He said when someone comes in and requests a margarita with their meal, he wants to be able to serve them.

Molly Broder, owner of Broder’s Cucina Italiana, 2308 W. 50th St., whose restaurant only has a wine and beer license, said she’s not surprised that more businesses are trying to upgrade to full liquor. "It’s a money-maker, and this is a tough business to make a buck at," she said. "You can’t be super-successful without it."

Cynthia Olson, owner of N.E. Thyme Caf, 4257 Nicollet Ave., a Kingfield restaurant that only serves wine and beer, agrees with Broder. She said the reason the food business is tough financially is the profit margins for food. "It’s hard to make a plate of food profitable," Olson said.

Making and serving food is labor-intensive and thus expensive, especially for Olson’s restaurant, which makes items from scratch. However, she said, wine is often marked up at double or triple a restaurant’s cost, which greatly improves the overall meal’s profitability.

Although Olson and Broder have no current plans to seek a full liquor license, Broder said not having full liquor does restrict her menu, prohibiting some traditional Italian drinks for before and after dinner. The recent addition of full liquor in Edina restaurants, she said, also brings extra competition to her Fulton restaurant.

Tom Bicanich, owner of Caf Bicko in Linden Hills, said that although he is currently allowed to sell wine and beer, he’s hinging his restaurant’s future success on a full liquor license. "It’s your best profit margin item," he said. Bicanich said a full license is necessary to be able to compete with larger chain restaurants. "It’s tough to compete on an uneven playing field," he said.

Does serving alcohol affect the neighborhood? Although many in Linden Hills supported the full liquor license at Caf Bicko, some who lived closest to the caf, like Judy Maltby, were against it. She said there was a fear it would turn into a bar, which would impair the neighborhood given the establishment’s close proximity to homes.

Maltby said people go to restaurants for the specialty food, so not having a full liquor license wouldn’t hamper the restaurant’s business or leave Bicanich at a

competitive disadvantage.

Concerns such as Maltby’s spurred the City Council to initially reject Caf Bicko’s application, but Bicanich said he’s hopeful another application will succeed.

He said that, for his business, the upgrade is necessary, because small neighborhood restaurants don’t do as well as they used to and they can’t make it unless they’re a "full-service" restaurant — which includes a full bar service. "If you’re not a full-service restaurant nowadays, people move on," he said.

Broder said neighbors’ initial fear isn’t a surprise. She said in most Southwest neighborhoods there is an underlying fear that liquor licenses will spawn bars and cause the whole neighborhood to decline. Broder said it’s an unfounded fear, because Southwest restaurant owners are very responsible and respectful of the neighborhoods they’re in. Despite that, she said, the city has a significant control: a food-to-alcohol ratio that keeps liquor-endowed restaurants in check.

Ziegler said most liquor-serving restaurants must have 70 percent of their sales in food; some are required to sell at least 60 percent food. Ziegler said restaurants must submit yearly statements to the city for review.

When Ziegler initially approves a license, it goes to Fifth Precinct Liquor Inspector Kent Warenberg for a final sign-off. Warenberg said that for each application, he does a criminal background check, makes sure the business is legitimate, checks for any reason the business shouldn’t serve liquor and reviews comments from public meetings held by the city.

After that, Warenberg said his only contact with the businesses stems from complaints, which are rare in Southwest. "I get very few complaints in Southwest," he said. "Generally the restaurants are run very well."

Warenberg said the few complaints he gets are localized around business districts in Uptown, and on Hennepin and Lyndale Avenues. Recent complaints include serving underage minors, over-serving or serving obviously intoxicated patrons and serving after hours, for which businesses are tagged.

Ziegler said that from what he’s seen, liquor licenses in neighborhood restaurants have had a minimal effect on the surrounding neighborhood, if not a positive one. He said that for many it’s been a good thing, because restaurant patrons don’t have to get in their car to drive in order to have a meal and some alcohol. "It’s a huge factor in their success," he said.