Bar owners are struggling and it’s not just because of the pandemic

The strained sounds of a pop song bounce off the walls and spill onto the sidewalk. Its hollow, tinny sound parallels the look inside the bar: empty. Barstools stand as reminders of the once bustling business and warm-hearted social interactions that took place there. Outside, holiday lights sway in the breeze as traffic lights go through multiple cycles without any cars in sight. A few patrons prohibited from quaffing their drinks inside huddle against railing set up on the sidewalk and sip from their beer cans and tumblers in between puffs of e-cigarettes. The discarded vapor twirls into the night air, unsure where it’s going or what will become of it.

The entire scene is a metaphor for what taverns and bars are going through right now. This week marks 85 years since the 18th Amendment, aka the Prohibition Act, was repealed in North Carolina. In some ways, it still feels like 1935 to bar owners.

Executive Order No. 118 issued on March 17 by Gov. Roy Cooper required restaurants, bars and taverns to shut their doors due to coronavirus safety concerns. There was a glimmer of hope for financial relief for bar owners in early May when the NC General Assembly finalized a $1.5 billion relief package to address the pandemic. The NC House passed a provision that would have allowed businesses to sell mixed alcoholic drinks for takeout and delivery, but it didn’t survive negotiations and was removed from the final draft.

By May 30, restaurants — even ones with bars selling liquor by the drink —breweries, taprooms, wineries and distilleries were allowed to open at 50 percent capacity, with social distancing and mask requirements, while bars and taverns were required to stay shuttered. Burke Street Pub owner Tiffany Howell does not think that is fair.

“Why would people come to my bar and have to drink outside when they can go a half-mile down the street to get the same alcohol that was purchased at the same ABC location and drink it inside?” Howell asks. “Other establishments had the green light to provide the bar type of experience for my customer. Restaurants, breweries and distilleries were booking bands every weekend. People were ordering beers and shots whether they were ordering food or not, running unchecked. I don’t see the difference.”

Relief came into sight in late September when Cooper announced the N.C. Mortgage, Utility and Rent Relief program which can provide up to $20,000 in relief funds per qualifying business location.  Bars, taverns, night clubs, cocktail lounges that have not been able to operate during the COVID period were able to apply for up to two business locations. The application period ended Nov. 12 and to date, funds have yet to be distributed. Meanwhile, Executive Order No. 169 became effective on Oct. 2 which allowed bars to open and operate. But the mandate allows for bars to reopen with outdoor seating only at 30 percent (which equates to 7 people per 1000 sq. ft) capacity or 100 seats, whichever is less.  Patrons may enter the establishment to order and use the restroom but no alcohol consumption is allowed indoors.

So, what makes bars different from restaurants? Every bar is different, but many bars are housed in narrow, indoor spaces with no windows and little room to move around. Unlike restaurants, which can space tables far apart, bars typically have fixed barstool seating and layouts that encourage people to mingle. People go to bars so they can socialize. Most are not going to want to sit six feet apart and yell. When people drink, alcohol lowers inhibition and promotes breaches of social-distancing protocols, sharing of drinks, food and personal space. People go to restaurants to dine, but also to drink. Overall, it’s the human experience that patrons are seeking.

Danielle Bull, owner of Bull’s Tavern in Winston-Salem, can’t pretend that the restrictions don’t cut deeper than diminished profits.

“It’s like a watered-down drink,” Bull says. “It’s a watered-down bar. It’s not the same. And I can’t dress it up and pretend that it is. It’s just not the same, it can’t be the same until we get past this.”

While the new mandates have put increased pressure on the bar industry, the circumstances were ripe for business failure before the pandemic ever hit.

In 1937, the NC ABC Commission was formed to provide regulation and control over the sale, purchase, transportation, manufacture, consumption and possession of alcoholic beverages in the state of North Carolina. Today, NC ABC Commission and county municipal boards operate the retail stores that sell bottles of spirituous liquor. And from the looks of it, it’s the “spiritous liquor” that is a problem.

On the other side of the cocktail glass is Scot Sanborn, owner and distiller of Sutler’s Spirit Co. in Winston-Salem.

“I don’t have a problem with the ABC system,” Sanborn says. “If there’s one thing I don’t agree with within the system, it’s that there are one too many taxes in there.”

He says that Sutler’s retail sales picked up around 30-35 percent and he didn’t start feeling the pinch of reduced pandemic revenue until April. Still, year-to-date, Sanborn says he’s down about 15-20 percent in revenue.

“Obviously, sales went down not having the bars and restaurants moving our product which was close to half our business,” he says. “Yeah, I’m not making as much as much money, but I can’t complain one bit if I’m able to keep my lights on.”

The taxes imposed on liquor seem superfluous, bordering on extravagant. For example, Sutler’s Gin is $29.95 in every ABC store across the state.

Sanborn sells each bottle to NC ABC for distribution and product placement in ABC stores for $15.65. NC ABC charges permit holders, like Howell and Bull, $33.70 for the same bottle. And bars are taxed again every month based on liquor sales. Not only do businesses have to operate at a severely reduced capacity, the levels of taxation seem to never end and there is no more financial relief in sight.

“This is the Bible belt. We have legislators on both sides of the aisle who still think liquor is a sin,” says Howell. She goes onto explain how if liquor permit holders surrender their licenses, they are more than welcome to open at 50 percent capacity and serve beer and wine only.

“The word ‘bar’ is a dirty word but they’ll let it be served in restaurants and country clubs or private 501-c3s like lodges and VFW posts,” Howell says.

It’s been 85 years since the government repealed Prohibition, but the current climate makes it feel like 1935 all over again.

“I’m very aware that another closure is coming,” Bull says. “I don’t know if it’s going to be this Friday or the next. We’re just going to try to hold on. When the next closure happens, I’m going to shut off as much stuff as I can and try to stretch it out to the other side.”