Elmer Mejicanos had no plans to shut down his popular low-ABV cocktail bar Lilah just seven months after it debuted on Chestnut Street in the Marina. 

But the beverage director and his business partner, chef Adam Rosenblum, got a deal they couldn’t refuse: the chance to purchase a Type 47 liquor license for just $150,000, which would allow them to sell a full menu of high-proof liquors, instead of just beers, wine, and low-proof spirits. 

“As soon as we heard the price, our jaws dropped,” Mejicanos says. “We’ve never heard of liquor licenses going for that amount.” 

Now, Mejicanos and Rosenblum are flipping the 500-square-foot Lilah space into a modern Jewish deli, Super Mensch. It’s a concept the partners had dreamed about for years, paying homage to New York City delis while featuring what Mejicanos thinks could be his most creative work yet: “I think this is gonna be the best cocktail menu I’ve made in my whole career.” 

The change wouldn’t be possible without a Type 47 or 48 license — typically referred to as “full” liquor licenses because they allow for the sale of all types of booze. Because California law caps the number of these licenses available in each county, and because their value is determined on the open market, like a used car or a piece of real estate, they’ve historically commanded high prices: $250,000 or more in San Francisco. Understandably, prices dropped during the pandemic, as bars went belly-up and the license marketplace plummeted. But San Francisco brokers and restaurant and bar owners say prices have crashed to record-low levels in the last 18 months. 

Today, it’s possible to get your hands on a full liquor license for low six figures, according to Patrick Totah, a listing transaction agent with Restaurant Realty Company — a roughly 40% drop from pre-pandemic highs.

The bargain-basement prices reflect supply and demand. Whereas the licenses used to be hard to come by, dozens are now on the market, as the ranks of new bars and restaurants continue to dwindle. In 2019, spirits expert Thad Vogler owned four full liquor licenses, for which he paid about $1 million collectively. He sold them off during the pandemic for just $400,000.

Meanwhile, the liquor license for Vogler’s Bar Agricole, which closed in October, is “shelved,” meaning not in use and, potentially, available for sale. Vogler isn’t actively trying to sell it, he says. Instead, he and his former landlord plan to transfer it to the new tenant, essentially using it as an incentive to bring someone into the space. Vogler says the low market value for the once-coveted licenses is “a key indicator that San Francisco is still not faring well for restaurants.”  

The low prices for liquor licenses in San Francisco — the most lackluster market in the Bay Area, according to Totah — reflect a shift in the way restaurant and bar owners assess the value of being able to sell cocktails. “I think for a long time people saw a liquor license as a way to correct for other challenges, because you made so much money on liquor it would balance everything out,” Totah says. “Whereas now, I don’t know that that’s 100% true.” 

Attorney Nick Colla works with hospitality clients on land use and zoning issues and runs a brokerage that focuses on liquor licenses and commercial leases. He thinks the city’s floundering liquor license market reflects larger industry trends; namely, a nationwide decrease in alcohol consumption. “I hear a lot of things from my clients,” he says. “One of them is that the quote-unquote fresh livers, the younger generation that would go out a lot more, doesn’t go out as much as the older generations did when they were their age.”

Brian Sheehy, founder and CEO of Future Bars Group, owns a dozen bars in and around downtown San Francisco. He bought his first full liquor license about 20 years ago for $40,000, but in the past decade, he’s grown accustomed to seeing prices between $220,000 and $250,000. Today, he says, it’s possible to buy one for $100,000, including fees paid to the brokers who handle the deal. “That really shows the pathetic nature of hospitality” in San Francisco right now, he says. 

Still, Sheehy’s not concerned about the decreased value of his licenses, since he’s committed to keeping open his bars, which include Bourbon & Branch, Pagan Idol, and Zombie Village. But he’s worried about Mayor Daniel Lurie and Sen. Scott Wiener’s proposal to create 20 new liquor licenses downtown.

Of the 12 bars Sheehy operates, only the three clustered off Market Street near Union Square and the Moscone Center — Lark Bar, Local Edition, and Dawn Club — are doing “very well,” he says. The others, including Nightingale, located near the edge of Union Square and FiDi, continue to struggle. “We have a lot of confidence in the future of San Francisco, but we’re stretched to the limit in the downtown area,” Sheehy says. “It’s supply and demand, and trying to mess with the equilibrium that we have with the number of licenses issued could be a serious long-term detriment.” 

Sheehy would like to see city officials figure out ways to get “shelved” licenses, like Vogler’s, back into use, rather than creating new ones. Public records show there were 51 shelved full liquor licenses in San Francisco as of Wednesday.

In technical terms, the out-of-use licenses are “surrendered” to the state Department of Alcoholic Beverage Control. According to state law, bar and restaurant owners have to notify the liquor department if they close or otherwise stop using their license for more than 15 consecutive days. Owners are then allowed to keep the license in “surrendered” status for up to a year before being required to either put it back into use at a new business or sell it to someone else.

But some of the surrendered licenses in San Francisco are connected to businesses that have been shuttered for years. The license for Bluestem Brasserie, which went dark in 2022, remains in surrendered status, as does the license for historic Black-owned bar Sam Jordan’s, which ended its 60-year run in 2019. It’s not uncommon for the liquor department to let owners extend the time a license is surrendered while they secure space and funding to open a new business. 

But the high volume of shelved licenses points to a serious slump in the city’s bar and restaurant industry, Sheehy says: “Even if I was offered a license for $50,000 right now, I would say no.”  

Behind the alarming numbers, there may be signs of better days ahead. Chef Peter Hemsley shelved the liquor license for his Michelin-starred restaurant Aphotic after it closed in October. Because licenses are attached to an owner, not a location, he plans to put it back into use when he opens his yet-to-be-named restaurant in the Jackson Square space previously claimed by the Irish pub Kells.

Hemsley says even before he knew he’d be opening another restaurant, he didn’t consider trying to sell Aphotic’s license. “It’s an opportunistic sort of period in San Francisco,” he says. 

Among those taking advantage of the buyer’s market for liquor licenses are Jody Harris and his sister Gingy Harris Gable, the owners of Marina District restaurant Cultivar. They opened as a winery in 2009 and expanded to a restaurant in 2017, focusing on farm-to-table food and wines produced using grapes grown on the family’s property in Napa Valley.

Two years ago, Harris looked into adding a cocktail program, but a full liquor license would have cost $180,000. Six months ago, he bought one for $120,000. “A few things were colliding,” Harris says. “I had a little bit of money to spend on the business, and the price was what seemed like an all-time low.”

Cultivar’s new cocktail menu — which includes the Black Goji ($17) and the Prickly Agent ($16) — has created buzz around the business and helped it attract customers who don’t drink wine. Harris says liquor sales have yet to outperform wine, “but last Saturday night it came close.”

It’s been a challenge learning to prep garnishes and strawberry-infused rum, plus creating a system for ordering spirits to ensure the bar is always stocked, he notes. But he has no regrets about the investment in the license. “Honestly, now that we have it, I doubt that we’d ever find a reason to sell it unless we’re exiting the space,” he says. “It is an asset, and I do think it’s close to the bottom of the market.” 

Another side effect of a lower financial barrier to entering the bar industry could be a shift away from beer- and wine-focused concepts and low-ABV bars like Lilah. In recent years, the city has seen an explosion of wine and beer bars in part because the required liquor license costs a fraction of the price of a Type 47 or 48 — sometimes as little as $2,000. 

But with full licenses available at what feels like a once-in-a-lifetime discount, more operators will likely decide to go all-in on hard liquor. “I mean, personally, when I walk into a place and they’re like, ‘Oh, do you want a bloody mary with soju?’ I’m kind of like, no, thank you,” Colla, the attorney, says. “I think now is a better time [to open a bar in SF] than it was at any time within the last four or five years.”