PlanPhilly has a fascinating look at the economics of this summer’s pop-up beer gardens — doing a bit of math, the site says, the gardens aren’t paying that much less than most bar owners for their liquor license — and then goes to talk to the neighbors:
While one might expect neighboring bar owners to hate the pretty new competitor moving in next door, the exact opposite is true. Marcus Ferreira of the South Street West Business Association polled community businesses to gauge their reaction to their new neighbor and the response was overwhelmingly positive: of the thirteen respondents, only one was not in favor of the neighborhood’s adorable new PUG.
Since PHS opened across the street “our numbers have almost doubled” says Bob Dix, manager of Bob and Barbara’s. Other bars and restaurants nearby reported that business is up compared to last summer, and even reaching peak season heights.
That the ostensible competitors surrounding a pop up beer garden actually benefit from their new neighbor is less surprising than one might think. Retail economists call this phenomena agglomeration: when firms in related fields cluster near each other, they attract more customers than they would on their own. While margins may decline, the increase in volume is enough to generate greater profits. … For folks like Dix, a beer garden was the “last piece” in creating that mutually beneficially cluster on South Street.
In other words: All the concerns that might cause over-eager state legislators to shut down a loophole that allows that beer gardens to exist … we’ll they’re minor concerns at best, compared to the advantages the gardens generate.