Licensed to Fail: Red Tape Driving Chicago Bars to Extinction

Another giant has fallen in the Chicago food and bar landscape. The Chicago area staple Old Country Buffet is one of the latest landmarks to announce it has closed its door permanently. COVID-19 social distancing measures and urban flight have heavily harmed business in Chi Town, but city licensing regulations continue to make things worse. In addition to meeting social distancing guidelines, and updated cleaning measures, bars and restaurants are expected to apply for additional licenses to operate which cost several thousand dollars. City officials can and should staunch the financial bleeding by suspending excessive licensing laws.

When Gutheries on the city's North Side closed in July, the owners cited COVID-19 safety measures and excessive regulations pushing them to close after serving their community for over thirty years. Other bar owners have chosen to remain closed under Phase Four because they cannot afford licensing a patio in addition to covering costs of a struggling business. 

Opening a bar in the city of Chicago costs almost $4500 to license. If a bar owner is lucky enough to own the land adjacent to their bar and wants to open a patio, they also must apply to have the outdoor patio licensed for liquor service to the tune of $2,000. A license to serve food runs between $500-$1100. Want to cover the patio? That requires a tent permit.

After purchasing these licenses, there are tough restrictions on hours and activities. The patio can’t stay open all night. Per the terms of the license, last call must be before 11 p.m. Sunday – Thursday and 12 a.m. Friday and Saturday. Ever wonder why the bars in Chicago always seem to close so soon? Late hour licenses to sell liquor from 2 to 4 a.m. within the city cost another $6,000, and they don’t apply to the patio. For that you need a retail food establishment license, and an outdoor café license. Some bars considered musical performances to boost revenues, but per the licensing restrictions, food or alcohol and live or recorded music on an outdoor patio is also forbidden.

As if all this wasn’t bad enough for business, even if a bar owner has the money to run this licensing gauntlet, their neighbors have a legal right to shut them down. In July, when a 37-year old Ukranian Village bar tried to open a six-table patio the legal way, a neighborhood community group convinced the alderman to pull the license two days after it was approved. It was only after a petition garnered 900 signatures in support of the bar that, several weeks later, the patio was finally approved. Many bars would not have made it that far. 

Notwithstanding the pandemic, bar and restaurant entrepreneurs in the city were suffocating under the red tape imposed on their operations within the city. Now, this licensing plays a major factor in keeping them from coming back. 

 

With winter approaching, the bar and restaurant industry may face even more restrictions regarding outdoor seating and heating. If bar owners can barely keep the lights on due to social distancing guidelines, how will they ever cough up another few thousand just to be licensed for business?

The alderman of the 42nd ward, otherwise known as “Chicago’s Central Business District” notes that the city can do better to accommodate struggling small businesses through licensing reforms. Brandon Reilly told the Tribune, “It will take more...flexibility in city regulations, such as increasing capacity levels, liquor-serving hours and street closures to create outdoor seating, for the rest of the bars and restaurants to hang on.”

More than fifty notable bars and restaurants have already permanently closed in the Chicagoland area due to financial strain from Coronavirus restrictions, and the list grows longer by the day. 

From first dates, to happy hours with co-workers, to nights out with friends, bars and restaurants provide an essential venue for the activities that bring us city dwellers closer together. Without special measures in the form of relaxed licensing to accommodate struggling bars and restaurants, the Chicago we wake up to after the pandemic subsides will be unrecognizable from the one we knew. 

Ann Marie Miller is a Young Voices contributor and economist. She writes on urbanism, development, and regulatory reform. Follow her on Twitter @annmillerecon.