TWIN FALLS — Most of the bar owners Chris Hengel knows don’t own their liquor licenses — they lease them.
Twin Falls can issue just 33 liquor licenses throughout the city. And Hengel, co-owner of Anchor Bistro & Bar, has noticed a prevailing trend: A few families control several of those licenses and crowd out the waiting list for other bars.
Those families, in turn, then lease their licenses out as an investment after two years. Businesses that don’t own a license must choose one of three options: Play the waiting game, pay thousands of dollars to buy a license, or lease from someone who already owns a license.
“If you see the same family members getting it over and over again, it’s a game,” Hengel said. “The system is broken.”
The owner of a liquor license can charge whatever a lessee is willing to pay. Anchor Bistro & Bar leases its license for $1,800 per month, Hengel said. To buy one in Twin Falls, he said, would cost around $125,000.
Having a liquor license not only boosts an establishment’s sales, but also drives up the value of the business and the property, while skyrocketing insurance costs.
The unwritten rule for buyers, co-owner Jacob Pierce said, is to offer the average price of the past three licenses that sold.
Pierce and Hengel bought Anchor Bistro from the previous owner about eight months ago. As part of the agreement to buy the business, they agreed to lease the liquor license — with an option to buy that, too.
But they were aware of a potential risk: A big company could come along and swipe the license out from under them if it offered big money. So as part of the lease agreement, Anchor Bistro has first right of refusal to buy the license, and only has to pay the average of the last three licenses that sold.
“There’s definitely a demand for liquor licenses,” Hengel said. “I know three or four businesses that would love one right now.”