$350,000 is the average cost of a liquor license in New Jersey.
$300,000 is the cost in Florida.
$400,000 is the cost in Texas.
That’s how much it cost to buy a liquor license in the US unless someone wants to go through a 1-2 year process where many states have random drawings to win a license.
Most people know liquor as an extremely high margin thing for bars where the margin average is 86%.
The cost though for most bars or restaurants to serve liquor though are so high that it basically kills it.
The average drink at a bar is $5.50 for a liquor product.
Margin on that is $4.73.
That means a bar would need to sell in a state like Texas, 84,566 drinks to stay in business.
This process puts most bars or restaurants in some form of debt for liquor licenses.
Worst part is this isn’t even really a tax, because most state governments just have a set quota on liquor licenses with a flat fee. They don’t normally make any profit from the auctions or anything like that.
Amusing thing on this is the renewal cost for a bar averages $1,400 a year in most states.
It’d be cheaper to triple the renewal cost and pay for more checks on bars versus making a large cost to get started.
And this is just one example of insane red tape to launch or sell something.