IFO report shows taverns, licensed restaurants still need help recovering
Today, materials submitted by the Independent Fiscal Office (IFO) to the Pennsylvania House Appropriations Committee in advance of state budget hearings paint a clear picture exactly how hard the tavern and restaurant industry was hit financially during the pandemic. According to the Pennsylvania Licensed Beverage and Tavern Association, the figures in the IFO report are concerning and suggest the industry continues to need assistance as part of its recovery. The Pennsylvania Licensed Beverage and Tavern Association is the statewide political voice for family-owned taverns, bars, and licensed restaurants.
Key Findings Related to Taverns, Licensed Restaurants (Dec. 2019-Dec. 2021)
- Full-service restaurant industry in the state lost 30,000 jobs between December 2019 and December 2021. (p. 3 of report)
- The costs for food and beverage purchases (15% of the total) increased in that same time frame, at rates higher than all other segments of the economy except energy and durable goods (which comprise 16% of the total). (p. 5 of report)
- At the same time, the average hourly cost of employees in the leisure and hospitality industry increased in June 2021 by 7.8% over 2020 and in December of 2021 by 14.9% over the previous year, more than double any other industry. (p. 5 of report)
- Tax revenues from sales of Malt Beverages this year to date was at $13 million, a year over year decline of -5.9%. And tax revenues from sales of liquor totaled $260 million, a YOY increase of 6.0%. (p. 10 of report)
- Related to the tavern industry, the Brewers’ Tax Credit was estimated at a value of $5 million in 2021-2022. The report notes smaller brewers can’t fully use the credits. IFO noted: most state brewer incentives place a limit on production and target small brewers, and it recommend targeting smaller brewers going forward. The credit is likely a windfall to large brewers, and the report says Pennsylvania should provide a mechanism for smaller brewers to use the credit better, perhaps by converting it to a grant or making the credit refundable. (p. 20 of report)
PLBTA Statement from Chuck Moran, Executive Director
It’s been a difficult time for family-owned taverns, bars, and licensed restaurants for the past two years. Mitigation orders, variants, supply shortages, and workforce issues have set the industry back. Today’s report from the IFO isn’t surprising. It’s something everyone in the industry realizes has happened, but is now confirmed in hard data. Industry costs including supplies and labor have jumped.
As small businesses within the hospitality industry face continued struggles, the legislature has the opportunity to be the hero by passing meaningful legislation that supports family-owned taverns, bars, and licensed restaurants. Bills that would provide financial assistance sit waiting for action. In addition, bills addressing customer convenience through industry innovation would be helpful. Our Association has testified in front of state committees on these bills during the past year.
Bills introduced that would be helpful address the following issues
- Legislation to increase the liquor discount from 10 percent to 15 percent. This legislation passed the House in 2021 with a unanimous vote. This would be across the board, and have a minimal impact on the PLCB’s profits, but be very meaningful to our members’ cash flow as they struggle to stay afloat financially.
- Grants and tax incentives through recently introduced legislation would financially prop up struggling small businesses as part of their recovery.
- Legislation to level the playing field for all liquor licensees, and standardize the rules for amplified sound limits at property lines. Modification of these rules would help incentivize our members to expand outside, and allow entertainment which attracts consumers.
- Allow business owners more opportunities to get creative with special promotions and happy hours, opening channels for new specials and specially priced combos. Our Happy Hour laws – like many others in this industry, are a throwback to earlier times, Blue laws, and control, not reflective of today’s consumers or markets. It’s time to allow liquor licensees to make these financial decisions for themselves.
- Mixed drinks to go. Legislation to do this has passed the House twice with 170 votes or more. During the Covid-19 restrictions, this gave our members a small opportunity to maintain cash flow and expand offerings, without any increase in the incidence of liquor related accidents or arrests.