Liquor Factory in Andover, NJ with Matt Tobin
Guest: Matt Tobin
Topics: Liquor Factory,
Chris Ressa 0:06
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So welcome, everybody. Today I have with me Matt Toby. Max from hupac on New Jersey, and him is his family, phone, six liquor stores. They are legends in the Northwest New Jersey area, their small business icons. Matt is also a friend. He’s in my fantasy football league. And I’m excited to have him on the show. Welcome.
Matt Tobin 1:21
How you doing Russ? I’m doing very excited to be here.
So you guys have six liquor store locations. And you guys have been around for 31 year. So give us some color around the businessman.
Well, my uncle started the business in 1988, he opened up his first store and landing. And then my his two brothers came along with him. It was really a family thing from the get go. They opened up businesses within five years of each other a couple of times and really just went from there.
So you guys are the liquor factor, you kind of dominate the lake Hopatcong area, you’re surrounded the lake and it’s a summer Lake town and whatnot. So what do you guys focus on? Is this a beer business, a liquor business, a wine business? What do you guys do?
Well, we do a little bit of everything. I mean, obviously, we want to focus on wine, beer and liquor all at the same time we sell all three of them. I know in some states, like pa you know, they only let you sell either beer, or wine and liquor. So it’s either a beer store wine or liquor store. In New Jersey, they let you sell all three at the same time in the same area in the same place. So all stores try to try to strive on all three of those. When us as a company as liquor stores we try as managers being knowledgeable of all three. I mean, some stores are more wine selling stores, as in Sparta for have an upper income area, buy a lot of wine, and it’s a party atmosphere. You know, they host a lot of parties. And then some are more beer selling stores, specialty stores around the lake will pack on in the summer. As you mentioned, we have full packed on location, which is two minutes away from the beach. And we also have the Jefferson location which is located right on route 15. And that’s a five minute drive to the lake.
Got it. And so how big are these locations? I’ve seen liquor stores, you know, little package store that’s 1000 feet across the country or you see like a total wine or something like that. That’s 30,000 feet. How big is a liquor factory?
Yeah, so we start when my uncle started off, we had a couple of smaller stores. But moving forward, we’ve we’ve been going five to 10,000 square feet and all six locations. That small. I mean, it’s just like any business. I mean, we were in Sparta for about 15 years. And we were in a small little strip mall. And a big location, a big office building opened up down the street. And we decided to move down there. And the bigger the store, the more people you can attract and better business. We almost tripled our business just moving that store. So we try to make it as big as possible.
And so and how big of a business is this? Six locations. This is a $5 million business. This is a 10 million.
Last year of all six stores combined. We did anywhere between 17 and $18 million in sales.
Wow. So it’s a pretty pretty sizable business. And do you guys plan on opening any other locations? Are you set for nap?
Well, the last one we opened up was in 2016 in the Bairam location on 206. So my uncles are always looking the whole thing with the liquor, liquor licenses in New Jersey is you can only have one person can only have two to their name. So my three uncles all have to to their name and they max out at that the liquor business kind of like helps the small businesses in New Jersey because just for for instance down in South Carolina, North Carolina in those type of areas, you could just pay an annual fee and be able to sell liquor out of your store. What Every store you have, whether it’s it’s a liquor store, or whether it’s shop, right or anything like that. But in New Jersey, you can only have two liquor licenses under one name. So my three uncles all have to so I think, where he’s mentioned, if he does look for more, I would have to go into the three or four cousins names that are in the business.
That’s interesting. So makes it challenging to have a chain of like 100, stores, Jersey,
the biggest chain, that family owned chain is bottle King, bottle King, I don’t know exactly how many stories but they have at least 20. Their uncles, their cousins, their aunts, all own are in the business. And it’s a big family business that they run, just as we’re trying to do here.
In New Jersey, not only is the liquor license can only you can only have two in your name, I think the other piece about New Jersey liquor law is that there’s only a limited supply of licenses, right? And so the value of any one license is pretty crazy, right?
Yes, yes. So I mean, if there’s two different types of licenses as well, in New Jersey, there’s a bar and restaurant license. And there’s also a liquor store license, now we have a couple of both. The only difference between those two is that bar restaurant, when you think of a bar restaurant license, you can’t have alcohol in middle aisle, so in the middle rows, and they have to be all buried against a wall. And, and that’s where you have to have your liquor, if you have a restaurant license, which we have, I think three stores with restaurant licenses. And then in a liquor license, you can have displays on the floor, you can have multiple aisles where they’re not connected to the main wall. And you could sell it that way, which is obviously more valuable in our business. But you have to really take what you can get. Because in New Jersey, one restaurant license is applied in each town for every 3000 people. And one liquor license, like store liquor license is applied in each town for every 5000 people. So what I’m trying to say is most liquor licenses, whether it’s bar restaurant or actual liquor store, are really already grandfathered in. And the way that you’re able to get those is to buy somebody out. So there’s not you can’t really just go out and get whatever liquor license you want, you really got to take what’s there,
you would need like massive population increase in order to have more licenses. Grant
Yes. And that’s very, it’s very rare that you find a license now, if the business ever went, went under whatever it is, and you know, like for a certain while you get the hold that liquor license, and you can either sell it off, or if you do have an expansion where there’s not many liquor licenses or that are being used in the town, then it goes to the town and they they open up a private bid. That’s actually what it’s actually what happened in one of our locations in Andover.
That’s interesting. And I think that the color for everyone on you know, all the listeners on the New Jersey liquor law is helpful, because it’s not easy to you know, if Matt and Chris wanted to open up a t shirt shop, we can just rent a spot buy T shirts and sell it’s not that simple to do that with alcohol in New Jersey. So does this make it a challenge for like big chain stores like Chili’s or the Cheesecake Factory or someone like that? Do they have challenges? The same challenges to the small business owner getting liquor licenses?
Yeah, yeah. I mean, like, like I said, those big national chain stores, they all follow the same rules. Most of the stores must buy out another restaurant, instead of someone able to just be an open up, like you said, open up a store whenever wherever they want, they have to buy somebody out. Actually a little story. I know that. Speaking at Cheesecake Factory, I’m pretty sure don’t quote me on this. But I think they paid a pretty good penny to get into that Short Hills location. I think that liquor license in the short hill went for near near $2 million for just the liquor license itself in Short Hills.
Wow. And so what is the range of liquor liquor license prices? What’s the what’s the range that you see anywhere? from what to what? Oh,
well, I mean, the $2 billion in Short Hills, obviously, that’s a high income area that they wanted to get into, that they thought they think and I’m sure they are doing a lot of business, but I mean, anything. It really varies, I would say anywhere between $100,000 to close to a million dollars is the average, all depending on you know, the area that you’re in the town that you’re in, what type of business you think you’re going to do you know what’s surrounds the liquor license just like any other normal business that you look into.
Awesome, this shows really geared toward like, the stories behind how locations ended up where they ended up. And I think that for you know this story, I think it’s important to give everyone some color. So I appreciate all that. So why don’t you tell us the story of how you guys ended up in the handover location because you had to go through and, you know, you guys were protecting yourself against competition and really had to fight through to get and win that undisclosed bid. So once you walk,
yeah, so we so we opened up and over location in 2007. Before that, we had four stores that all that was one was inland in New Jersey, Jefferson, Sparta and hold packed on Sparta, one of our main stores that does our our biggest store that does most business is only a five minute drive to the Andover store where they were selling this license. So not only were we trying to, you know, build our business and create another store, but we also looked at it like you just said, you know, we’re trying to protect our area. So that’s another Sussex County liquor license that was come into play, where any high bidder would be able to get that. So when it all came about, we kind of had to make a move on it to make sure not only that we increase our business but that we didn’t lose business in Sparta and other locations. There was a closed bid, my uncle’s all three of them went in and tried to figure out some numbers of what they would lose in Sparta and what they would gain at Andover and Andover is not the biggest town, you know, there’s not as much to do there’s not as many cars but for us, we were looking at it the aspect that we didn’t want to lose business in any of our other stores. So that was a close bid. And my uncle’s decided about $200,000 for that small town to get that liquor license, and we ended up winning that liquor license.
That’s awesome. So there’s a closed bid, you guys, you know, submit? And that’s because the license went back to the town.
Yes, I don’t know if it actually went back to the town. But like I said, Andover actually big grew a little bit over the years. And they don’t have much around like that’s why it wasn’t really that popular of a spot to have liquor licenses and everything like that is because they don’t there’s not an over doesn’t have a million, you know, it’s not like a sport, or, you know, anywhere up east where they have a bunch of malls or shopping areas and stuff like that where a lot of people are going in and out of it’s not a going through town yet to go there if you’re going to Andover so it wasn’t as big as a margin. But for us, it was a lot bigger, so we didn’t lose business and other stores and bring in competition.
And so when you apply and you win this liquor license, is it specified to a location in Andover or can you take any location?
Now, if it’s already an existing liquor license or bar or whatever it is? There’s a certain I forget what it is. But there’s a certain amount of miles this go Yeah, radius that you can go but this was an open one that no one owned. As of now. We were able to go anywhere in the town of Andover.
So you win the liquor license. Did you guys have already have a location lined up?
Yes, we had everything pretty lined up. We’re in in a strip mall down in Andover, we wanted to make sure that we were at least around some local businesses that people are going in and out of, instead of Florida, where we’re not in any strip mall, people go through Sparta a lot. And they’re it’s a big town. So we didn’t have to have connecting businesses to make sure that we did business. So we went into a strip mall and Andover
got it. And in Sparta, you’re in like a freestanding location in there. Yes. Yeah. And so as you’re going through the process here, is this happening simultaneously? Are you guys working on a lease with the strip mall owner at the same time? Or did you already sign a lease with the guy and then go into the liquor license? Or is this happening simultaneously,
we had the opportunity go in that strip mall, but we waited until we were secure. And we knew that we had the license before signing any leases. The good thing with that is like I said, I mean, there’s a lot of strip malls out there that are that are vacant right now. And there was back then as well and it just gets worse and worse. So it’s not something that we had to jump on right away until we knew that we had the liquor license.
You get the liquor license and you end up getting this location you sign a lease. How, how long of a time process is this right you guys get wind and over we’re you know, you guys are clearly plugged in, you get wins that a liquor license is going to come available from when you hear that whisper of when it’s going to come available. How long is it between then and when you have to submit your bid. And then the bids are announced, and you’re the winner.
So the clothes bid in and over, I think was a month or two they gave it there was always speculation that there was going to be one that came came about, but after that it came out it was a month or two or so that you had a time I think I think it was exactly a month actually they you had time to figure out what your bid was. And they let as many investors go in there as possible. So they get the highest bid. And then after that month, then you know,
and is there any prerequisites to bidding? Like do you have to? Do you have to be like, an accredited investor anything? Or like,
Could I just go and bid? It’s just like buying a house to show that you have the net worth and whatnot, yeah, that you have the net worth or you have the funds in a bank somewhere, that you’re able to pay that off?
Got it. And when you buy the liquor license, there’s no time horizon, you own it until you want to sell it?
Yes, but you do have to within I think the law is three or five years between three and five years that that liquor license has to be active. So it’s someone just can’t sit on it. And like buy liquor licenses and then just sit on them. They have to they have to be active with those liquor license within a certain amount of time.
Otherwise, there just be a lot of people buying and holding them waiting for the
value and then selling them. Yes, someone with a lot of money can just go in there and buy them all, you know and then and then just sit on
your flippin liquor licenses. Interesting. And so you guys get this location, you open it up, one of your big concerns was that are not concerns you were trying to protect the Sparta location. Did this ended up impacting the Sparta location? Did it take business away from Sparta?
Yes, it definitely took a lot of business away from Sparta not as much as we thought. But it definitely was impactful. And you know what, it’s a successful store. It’s actually more successful than I think we we knew going into it. So it was a good investment for us.
That’s great. And this whole liquor license thing I think is really interesting. How does it affect online sales? Can I sell alcohol? If I had a liquor license? Can I sell alcohol online? In New Jersey?
Yes, we we actually do not do that. Right now. It’s a very slow business to online unless you’re a big big time wine cellar, or you’re selling $1,000 cases, $2,000 cases where you do your online selling like that we’ve never gotten into we’ve actually talked about it and looked into it. But we’ve never gotten into the online selling of the liquor.
So if you don’t have a liquor license in New Jersey, I can be in Texas and sell alcohol to a homeowner in New Jersey.
I do not know about that. Honestly. I mean, if you have your liquor license, I don’t know if they do it just within that state. Or you can go outside, but I’m pretty I would imagine you able to deliver it and to sell online to other states because at the end of the day, every state has different laws. Like I said, you can’t you can’t be in the same store wine and liquor and beer in PDF, you know, which, in my opinion isn’t isn’t the smartest law that they’ve ever made. But, you know, like so every state has different laws, where I would assume you are able to do that.
Got it. So you guys ended up opening the location. It’s been open since 2007. And it was really to protect the other location. What happened after 2007 agenda open another one.
Yes, we opened up Bairam in 2016, just a couple of years ago, actually Bairam kind of was like the same thing a little bit. They’re right down the street, they’re down 206 A little bit they’re probably within a 1050 mile radius. So we opened up that store actually hoping to surround ourselves and you know to control our area of Sussex of Boris County and the only liquor license or the only liquor store that was on 206 as a major highway. down that area was the shop right? Wine and liquors and the difference between us and a shop right or something like that is we’re more convenient Next, you know, you don’t have to go into the shop, right parking lot, and stuff like that. So we felt that we could pull a little business from them along with controlling our area.
And is the Andover license a restaurant license? Or is it a liquor store? License,
liquor store license?
Got it? And do you guys do more business in the ones that are liquor store license versus restaurant?
Well, it’s definitely easy to manage and everything like that. I can’t really tell you that, I would assume so. I mean, it’s more about the town and how many how many people are in a town how active the town is, you know, so I can’t really I would assume that, but I can’t really tell you for sure. The liquor license is better.
I guess real quick. I think the boulevard Pub is an interesting story, too. Why don’t you? Why don’t you tell us about how you guys got that location, since that’s a little unique.
Okay, so my uncle is before any liquor stores before the landing store, the Jefferson store, they owned the boulevard pub and a whole pack on that started in 1985. So they had a club, it was a bar and restaurant license, obviously. And they ran NAT for I think, close to 15 years. So they ran a pub for close to 15 years. And while they were doing that, that three brothers ventured out. And that’s when they went into the liquor store business instead of a club that they they started with landing, then they went to Jefferson four years later. And then after the Jefferson store, which was really good, they went into sport the next year. So then after when they started seeing that the liquor store was a good investment, and maybe a better business in 1999, they turned the pub into liquor store. So they shut down the club, they shut down the pub, and they made it into a liquor store. But they can’t have any liquors till this day in the aisles or not on the surrounding outside of the store.
So what goes in the center of the store, the liquor factory and alpaca.
So we have this thing called growlers. It’s a new thing where we tap beer and we pressurize the beer and tap it for you, and 32 ounce or 64 ounce bottles. And we’re allowed to sell it like that, just like a bar would, you know, like that’s like our open bar. So that’s a way around it. So we have, I think, like 10 to 12 beers on tap. And we pressurize those beers that we give them to you. And now these are specialty beers. A lot of the times people ask you for, you know, beers of Vermont or this state or that state, where necessarily you couldn’t get them and maybe say a six pack or a 12 pack. But we could bring it in as a keg and sell it. So instead of having them buy the whole keg, we take these specialty beers, or seasonal beers, or magic cat or whatever. And we put these beers on the tap, so our customers can get the beer that they want without buying the whole cake.
That’s fascinating. So if I, if I unpack that a little bit, and I understand it, because you’d converted this restaurant pub into a liquor store, it had a restaurant liquor license, and that means in New Jersey, you can’t have packaged goods on the center the floor in the aisles. And so the way to maximize the sales per square foot, what you’ve done is you’ve put kegs there just like a bar would have a keg, you put eggs in the center of the store, and then you fill growlers and sell them.
Yes. So actually, now, the Byram store that we just opened up in 2016 was kind of the same way. Obviously, we didn’t have a pub there was actually an old CVS. So we moved into the old CVS. And that was the same way we had a bar restaurant license. So to maximize our space and maximize profit, instead of having your registers on the outside of the walls, we put our registers in the middle, we put our Growler Station which I just mentioned to you guys in the middle. And then we put all of our chips, our sodas, our waters, all that stuff in the middle. So that’s just one big middle row. So then we had the whole outside of the perimeter of the store for liquor and all the variety of stuff that we need to put up.
Interesting. That’s a clever way to get to maneuver given how restrictive the laws are.
Yes, yes. So it’s a little aids and out of it, obviously, totally, totally legal, but it still takes away because when you go into a nice liquor store, if you go into our Sparta location, everything you know we have nice displays of things that pop out at you, you know, like pop out of the customer. So it does take away in that sense where we can have floor display Ways and, and you know giveaways raid on the floor with this displays and whatnot so it does take away a little bit like that, but there is definitely some ways that you can get around that.
Got it. And all these locations do you lease them all? Or do you own any of the buildings,
we own the whole pack on one and we own the Sparta one all the other locations we rent from right now which we are looking to as the years go on, you know like to buy out or to move our our liquor stores to a place if there’s any anywhere open that we can own the property.
Got it. I got to ask my my three questions. We call this retail wisdom. So it’s three three spontaneous questions. You ready? Yeah. QUESTION One extinct retailer that you wish would come back from the dead
i I’ll take it but I do think they’re still alive and in business.
The dead around me.
Number Number Number two right now I’m holding a Starbucks cafe Verona dark roast. 16 ounce whole bean. Coffee. So it’s the coffee beans. It’s a package. This is like my version of the prices right? What does this retail for on Starbucks website?
God I drink I drink plain black coffee. I have no clue what $7 $6 1299
Not even close. Not even close. Last question. Best piece of real estate advice for the people out there.
best real estate advice? Well, I would just say, you know did whatever you have visions of, you know, work hard. Go after it. And you know that you you miss 100% of the shots that you don’t take famous Michael Jordan quote.
Awesome. Well, listen, good luck and fantasy this week. I hope you lose and have a great Thanksgiving if I don’t talk to you. All right,
you too. Rest appreciate.
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