Food and Beverage Business Owners Criticize Liquor Control System

Complaints at County Council hearing Friday center on inaccurate orders and inability to get unique products quickly and consistently

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A partner in the Robert Wiedmaier Restaurant Group testified Friday that Montgomery County's Department of Liquor Control (DLC) is “an evil empire to most people in the business.”

In testimony before the County Council’s Ad Hoc Committee on Liquor Control, Frank Shull said poor selection, bad service and high prices keep Washington, D.C., restaurateurs from opening restaurants in the county.

“A majority of good operators in D.C. will not come into the county,” Shull said. “We have this discussion all the time. Restaurants don’t want to because they don’t want to deal with the DLC.”

The RW Restaurant Group operates three restaurants in Montgomery County—Brasserie Beck, Mussel Bar and Wildwood Kitchen—as well as restaurants in Washington, D.C. and Virginia.

The council committee is responsible for evaluating possible changes to the DLC. It is composed of council members Hans Riemer, Marc Elrich and George Leventhal.

The DLC manages the wholesale distribution of all liquor, beer and wine in the county. It’s also the exclusive liquor retailer in the county and operates 25 retail stores, which also sell beer and wine. The county-run retail stores compete directly with retail beer and wine stores owned by private individuals.

Several members of the local hospitality industry from restaurant owners and small beer and wine store owners to the founder of a D.C. craft brewery testified before the committee.

Shull said special orders of small production wines and craft beers are often shorted and that there’s a lack of accountability from the DLC.

With “[a]lmost every delivery,” Shull said. “[The product] is not in, it doesn’t get delivered and there’s nobody responsible for that.”

He said deliveries from distributors at the company’s D.C. restaurants often come before lunch, but in Montgomery County DLC trucks will show up at different times. Sometimes, Shull said, they’ll deliver during dinner or lunch service and “it’s disruptive to our business.”

He said special order wines and craft beers are often marked up 25 to 30 percent more by the DLC compared to their cost in the District. “We’re just turning around and passing that on to the consumer,” Shull explained.

Mike Jones, the operating partner at American Tap Room in Bethesda, echoed Shull’s comments. He said his restaurant, which features a variety of brews, is consistently shorted two to three kegs every week by the DLC.

“If anybody knows, craft beer drinkers are a unique culture of people and they are very discriminating and they are very demanding,” Jones said. “And when they consistently walk in to a bar that highlights itself as a craft tavern and we don’t have those beers, they go elsewhere. They’ll go into the District or to Prince George’s County where it’s readily available.”

“You have to fight for your piece of real estate every day,” Jones said. He described the DLC’s customer service as a “shadow of a person” and that most of the time when he calls, he gets an answering machine. He said the quality of customer service needs to addressed.

Jones compared the county’s control of liquor to the ban on dancing in Footloose.

“There was a time for this law, it’s done, this is the 21st century we need to move ahead and be progressive,” Jones said.

Retails store owners testified that they, too, are experiencing problems with the DLC.

Mike Hill, general manager of Adega Wine Cellars & Café in Silver Spring, said they have problems getting specialty wines and craft beer.

“If we like a beer or wine and we want to bring that into our store, the turnaround time can be eight days if we’re lucky or two to three months to not at all in some cases,” Hill said.

He said delivery times vary from 11 a.m. to 7:30 p.m. He explained that sometimes he receives orders that should have gone to other restaurants or stores. Other times his business receives sealed boxes that are labeled as one type of wine, but turn out to be another type when they open it.

“About 75 percent of my wall is bare because of items we’re unable to get,” Hill said.

Mike McGarvey, the founder of 3 Stars Brewing Company in Takoma, D.C., said his concern about DLC’s quality controls are one reason the brewery doesn’t distribute its beer in the county.

McGarvey said his brewery depends on the strength of its brand, “If you deliver a substandard product, the world of social media will crush you, very quickly. We can’t risk that.”

“We can’t risk having a product that’s handled in a poor way,” McGarvey said. He said if he can’t guarantee his beer won’t be left out overnight, or in a hot truck, then he’d rather not enter the Montgomery County market, despite his brewery’s proximity to the county line. After McGarvey’s comments, Riemer said it was important to identify ways to be more accommodating to local small businesses.

“This is the future, you’re the future,” Riemer said.

The DLC’s new Oracle computerized inventory system was also a target of ire at the hearing. Business owners said the new system, which debuted earlier this year, wasn’t designed to handle the inventory and distribution needs of the DLC and was resulting in inaccurate orders.

Riemer said the county government is taking an “all hands on deck approach” to handle the technology problems that have resulted from the new system. He said the technology is similar to the interface used by the county’s library system to order books.

“It’s a one-size-fits-all system that we’re trying to adapt to the DLC and it’s difficult,” Riemer said.

Elrich rejected the idea that the DLC needs to use the same technology as other county departments.

“The idea that you couldn’t have a separate piece of software to handle the inventory management system is troublesome,” Elrich said.

The council members on the committee have resisted calls to privatize the county’s alcohol distribution system, as it is in many other states and municipalities. The DLC generates about $30 million in annual revenue for the county, which goes to the general fund. The department also employs about 400 union employees.

Rather than fully privatize the system, council members have vocally supported an idea to allow private distributors to handle the sale of smaller production craft beer and wines. A report by the Office of Legislative Oversight that examined ways to improve the DLC, found that privatizing the special order of beer and wine would cost the county $4 million to $6 million in revenue.

Shull said his company would support this change, “That would be a huge, huge start for us.”

The DLC did have some backers at the hearing. Business owners said ordering stock mass-production items, such as Bud Light, is not a major issue.

A representative from the Presidents’ Forum of the Distilled Spirits Industry, which supports the three-tiered system of manufactures selling to wholesalers who then sell to retailers, said the organization values “innovative control models like the Montgomery County Department of Liquor Control.”

Kelley Spillane, the senior vice president of global sales for Castle Brands, which distributes liquor such as Gosling’s Rum, said prices may not decrease through privatization and that over the past 30 years control states have done a “great job” modernizing.

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