Restaurant owners say "Oh, hell no" to deal with the PLCB.
Editor's Note: Jenny DeHuff, the author of this story, is dating Terry Leach, general manager of Time. Time, Vintage and Bar, owned by Jason Evenchik, is a member of the restaurant coalition that has filed a lawsuit against the Pennsylvania Liquor Control Board. The individual owners, not the restaurants themselves, are named as plaintiffs. Leach is not affiliated with the lawsuit.
The brow-raising “sweetheart” deal between Jose Garces and the Pennsylvania Liquor Control Board has been the subject of rumblings in Center City since February, when the Iron Chef opened the only establishment in the city where consumers can purchase wine and spirits at lower cost, right from their comfortable seats at the Garces Trading Company.
Last week, the noise intensified when a group of feisty business owners filed a civil complaint against the PLBC’s arrangement with Garces Trading Company, the half restaurant, half state store nestled in the heart of Washington Square West, at 1111 Locust St.
On June 21, members of the Coalition of Restaurant Owners for Liquor Control Fairness (CROLF), a compilation of restaurant owners who operate licensed and BYOB restaurants within a quarter-mile of Garces Trading Company, filed a lawsuit against the PLCB.
“It is illegal, and it’s truly anti-competitive,” says CROLF attorney Dave Kwass. “Ultimately, the success of Garces Trading Company necessitates that other businesses can’t compete with it—that there are fewer consumer options, not more,” he says.
“I can literally plant my tush in Garces Trading Company seats and buy alcohol from the PLCB. Anybody who thinks we can compete with that doesn’t understand restaurant economics at all.”
Kwass says the group wants the liquor operations “shut down, suspended and, on a longer-term basis, the physical space be divided by a wall, as opposed to on the same footprint and premises.”
State Rep. Babette Josephs, whose district encompasses much of Center City, says the PLCB’s partnership with Garces is—to say the least—a conflict of interest.
“Because the liquor board picked and chose between restaurants and bestowed on only one …the favor of allowing them to have this arraignment, where diners can buy liquor and drink it at a low price, that makes the playing field un-level for other restaurants,” Josephs says. “I have nothing against Garces, it just doesn’t seem fair to me that the agency doing the regulating picks and chooses between entities that it regulates.”
While restaurateurs have been chastising the relationship between Garces and the PLCB for a while now, the lawsuit actually stems from Gov. Ed Rendell’s veto of Senate Bill 81, legislation that would have made several amendments to the liquor code and prohibited a PLCB store from sharing an interior space with another business, unless that business prohibits the consumption of alcohol on its premises. As for the already-done deal with Garces, terms of the bill state that his contract would not be renewed after its expiration date of January 2015.
In a veto message to the state Senate, Rendell said that prohibiting such an arrangement between a responsible business owner and the liquor board “impedes the modernization of alcohol sales in our Commonwealth.”
The governor went on to say, “In order to further bring Pennsylvania’s liquor sales practices into the 21st century, we need to encourage innovative PLCB programs and foster new and novel, progressive yet responsible ways to reach customers more easily.”
In a letter to P.J. Stapleton, chairman of the PLCB, Kwass warned the board of the risks involved with the state going into the restaurant business.
Since there was no open solicitation for bids, Kwass says it appears to be another example of covert, preferential contracting by the PLCB.
“What is shocking and surprising is that we would have been able to address these concerns, at least to the extent of maybe, 95 percent, with Senate Bill 81, and somehow, somebody got to the governor and got him to veto it.”
State Rep. Robert Donatucci, a Democrat in the 185th District that serves Philadelphia and Delaware counties, is chairman of the House’s liquor board committee. As a supporter of the bill, Donatucci says he was disappointed to see it squashed after it had passed successfully through the house and senate with majority approval.
“It’s wrong that you have an establishment that pays dearly for a liquor license, and then you have a restaurant that’s a BYOB, and for some reason, the PLCB can come in an open a store in there,” says Donatucci.
“Basically, we’re subsidizing their business,” Donatucci says. “And in a lot of cases, (the state) is paying rent to those places to have their store in there.”
Neither P.J. Stapleton, whom Rendell reappointed to his post early in the administration, or Jose Garces returned PW ’s calls or emails asking for comment.
Garces Trading Company's wine boutique is the first and only one of its kind in the state established by the Pennsylvania Liquor Control Board, and a concept that’s stirred up a ton of resentment among Philadelphia restaurateurs this year.