Roberto Trujillo is an East Boston entrepreneur who opened a small restaurant called Mexicali Sushi Bar in December. The 42-year-old immigrant from Mexico had worked in restaurants as runner and server since he moved to the area eight years ago. Trujillo put all of his life savings, between $180,000 and $200,000, into his dream of owning a restaurant that would offer the type of fusion food that’s very popular in his hometown of Mexicali.
It took Trujillo two years and seven months of City Hall bureaucracy — all the while paying the monthly rent for his chosen locale near Maverick Square — to get all the certificates and building and health permits for the green light. Almost right away, he was told there were no liquor licenses available for his area. “Then I inquired into how much it would cost me to buy one in the open market,” Trujillo said. Most restaurants that do have liquor licenses are allowed to sell them, and that piece of paper is often their most precious asset. “Last summer, I was told someone would sell it to me for $360,000. By the end of the year, it was $400,000.”
Trujillo, who estimates his sales would be around 40 percent higher if he were allowed to sell alcohol, is the classic small-business owner whom Boston should be nurturing. Instead, he was told earlier this year by a city official that he would have to wait until next year to see if a license becomes available for him to apply. Mayor Walsh has proposed adding new licenses for minority-owned businesses, but the idea requires approval from the state Legislature.
It is one of the most intractable issues in Boston: how to overhaul the anachronistic and financially prohibitive process to obtain a liquor license. Creating more licenses means that existing restaurants will complain that the value of theirs is being diluted; keeping the status quo means losing the economic growth and neighborhood vibrancy that entrepreneurs like Trujillo might produce. Yet the economic calamity for restaurants caused by the coronavirus crisis offers the city an opportunity to finally do it, creating an opening for the city to buy out some liquor licenses and begin the process of moving away from the anachronistic system of limited, transferable permits to one that creates a level playing field for entrepreneurs like Trujillo.
“Restaurants don’t need a bunch of temporary things now,” said Boston City Councilor Lydia Edwards. “They need real money. They have this asset that could get real money into their pockets and at the same time give the city some control over the industry.”
The status quo has amounted to an almost insurmountable entry barrier in an industry where inequities persist. Many attempts have been made at overhauling the process of handing out liquor licenses, which are capped by the state. While some progress has been made in adding a limited number of licenses in underserved areas, most Bostonians are probably unaware that Mattapan residents still don’t have the “luxury” of having a liquor-serving restaurant in their neighborhood.
The one sticking issue in trying to remove barriers for newcomers like Trujillo has been that current license holders have already invested thousands and thousands of dollars in a permit that the private market has essentially turned into an asset. If, say, all current licenses were suddenly converted into a nontransferable permit system, it might be unfair to restaurant owners who invested –– and borrowed –– to buy their licenses.
Enter the pandemic: The economic impact has been disastrous for the industry. Up to a quarter of the state’s restaurants may permanently close, according to the Massachusetts Restaurant Association. And restaurants in downtown Boston may be hit the hardest, due to the area’s high restaurant density and their reliance on normal customer-traffic drivers like tourism, sports, and colleges. They deserve some form of assistance, but the city shouldn’t miss the opportunity to attach some strings.
Councilor Edwards recently proposed that the city buy back liquor licenses from struggling restaurants, convert them to nontransferable permits, and then lease them back to owners. But leasing the licenses back may carry unintended consequences, such as increased liability for the city. An even simpler solution might be to offer restaurants a trade: They get money to help survive the pandemic and, in exchange, they forfeit the transferability of their liquor license.
This plan would get much-needed cash into the hands of restaurant owners while reducing the number of transferable licenses, currently at around 1,000. It would be a first step toward phasing out transferable licenses, which are the root cause of the problems faced by restaurateurs like Trujillo, and replacing them with a system of nontransferable permits available to any restaurant that meets the city’s health and safety standards. Anything that reduces the number of transferable licenses dilutes the political clout of the remaining license holders; anything that reduces the political clout of transferable license holders makes future reforms more tenable.
After three months of being forced to shut down to slow virus transmission, restaurants in Massachusetts were allowed to offer indoor dining last week, with certain restrictions. Sadly, this still won’t be enough for a lot of restaurants to make it. But a new restaurant landscape will eventually emerge, and it can be more equitable by removing liquor license barriers that create yet another dimension of haves and have-nots.
Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.