Today’s public hearing (March 6) by the Senate Law & Justice Committee to review the Pennsylvania Liquor Control Board’s actions during the COVID-19 outbreak showed the agency was ill prepared when the Governor ordered the closure of all of its retail stores on March 17, according to Committee Chairman Senator Pat Stefano (R-32).
During the two-hour hearing, committee members, PLCB officials and representatives from the restaurant industry discussed the many issues that have arisen since the statewide closure and over the ensuing weeks.
“Following an announcement on March 16, all stores were closed the following day,” said Senator Stefano. “While I recognize we are in an unprecedented time and the situation is very fluid, I have heard from many restaurants, taverns, and other small businesses about the confusion and chaos that resulted from this seemingly spontaneous decision.”
PLCB Chairman Tim Holden detailed the steps taken since the closure on March 17 to provide curbside sales and working toward the gradual reopening of stores in “yellow” counties. “During these extraordinary times, the PLCB is keenly aware of the significant impact the agency’s decisions have had on retail customers and the licensee community,” Holden said. “The PLCB remains committed to balancing the need to mitigate the spread of COVID-19 and serve our customers and the Commonwealth’s beverage alcohol industry.”
Responding to a question from Senator Stefano, PLCB Member Mike Negra said the decision to close the stores was made solely by the Governor without consultation or input by the PLCB. He said the one-day notice of closure “created a panic buy by the public and there was no social distancing.”
Senator Stefano said the PLCB has seen a substantial loss of revenue by the closure. The average daily sales over the past 14 days for all Fine Wine and Good Spirits stores operating with curbside and e-commerce was about $3.38 million or half of the $6.5 million these stores would have made if they had remained open, based on last year’s figures.
“With the Independent Fiscal Office reporting that the April liquor tax revenue was $18.6 million short of what was estimated, the legislature must take an active role in understanding the decisions that led to the closure,” Senator Stefano said. “We must gain this understanding, so we are better positioned to prepare and react to future challenges.”
Charlie Mooney, PLCB Executive Director, said sales down are down by 2.3 percent overall. That number would have been higher had the PLCB not been on a record sales pace prior to the COVID-19 crisis. He said the organization is now projecting yearly sales to end up down by 2-4.5 percent.
Senator Ryan Aument (R-36) said the impact of the closure emphasizes the need for a thorough review of the PLCB. “This crisis and the failure of bureaucracy, the crushing blow it has rendered to our small businesses, more than reinforces the need for reform,” he said. “It is absolutely relevant now and I suspect it is relevant to our small businesses who may never again open their doors.”
Senator Judy Ward (R-30) cited a media report regarding an individual who had to make 159 phone calls to place a curbside order. “The story would be funny, except it is true,” she said. “It highlights many of the shortcomings that our state-owned liquors stores have. The PLCB is not a partner with business, it’s a hindrance. You have put the nail in their coffin.”
Senator Gene Yaw (R-23) said there is “no logical sense” regarding the closure of state-owned liquor stores at the “whim” of the Governor while beer and wine sales continue in grocery stores. He noted that former Governor Gifford Pinchot created the PLCB in 1933 with the expressed intent of discouraging alcohol sales. “One thing this pandemic does, is it shows where the problems are,” he said. “The ghost of Governor Pinchot is alive and well.”
Senator Mike Regan (R-31) questioned the PLCB’s decision to use e-commerce considering that the board knew its IT system could never handle an overwhelming number of customers trying to buy products online. “You knew the website was going to crash, but you did it anyway,” he said.
Senator Tom Killion (R-9) said the PLCB’s restrictive measures have resulted in many Pennsylvanians shopping for alcohol in Delaware. He expressed optimism that the PLCB would make some bureaucratic changes to help restaurants and wineries impacted by the COVID-19 closures. “We need to save these jobs,” he said.
Testifiers representing Pennsylvania’s restaurants said the PLCB’s abrupt closure of its retail stores caused immediate problems and the ensuing weeks presented new challenges as they have struggled to secure wine and other products.
John Longstreet of the Pennsylvania Restaurant & Lodging Association said 96 percent of restaurant operators have laid off employees, consisting of 332,000 individuals, representing 81 percent of the entire workforce.
“Nothing about the last two months has been easy for our industry, but there are some things that could have been easier. One of these items is the PLCB decision making (process) as the crisis began,” he said. “For five weeks, grocery stores that held a WEP continued to have access to product — product that was not available to restaurants.”
Jon Myerow and Lauren Harris, representing Tria Restaurant Group of Philadelphia, criticized the PLCB for failing to communicate with its restaurant customers or to provide flexibility during the crisis.
“Today I give our restaurants a 50-percent chance of survival. Our two locations that remain open for takeout and delivery have seen sales plummet by 85 percent during what is normally our busiest season,” Myerow said. “Since nonessential businesses closed on Monday, March 16, I have never worked so hard in my entire life. Trying to survive is a strong motivator.”
“Nothing the PLCB is putting into motion is helping restaurants survive,” Harris said. “I do not believe they are trying to hurt us, but I have never seen such a lack of organization so broad and sweeping.”
Sean Faeth, Director of Sales and Operations for The Artisan’s Cellar in West Chester, said the PLCB showed overt favoritism toward its wholesale customers at the expense of smaller businesses. “The PLCB also had the gall to reach out to one of our largest accounts,” he said. “So not only did the PLCB shut us off, they tried to steal our business.”
CONTACT: Jacob Gery jgery@pasen.gov