Philadelphia and the Case of the Disappearing Neighborhood Bars

The neighborhood bar on the corner is becoming a thing of the past. / Illustration by James Boyle

Wanda’s Lounge was a bar. There were many bars like it, but this one was a wee corner dive on a residential block of Kingsessing, in Southwest Philly. For half a century, Wanda’s was the sort of down-the-way spot one always hopes might be down the way: a mirror-walled watering hole about as wide and as long as a train car, with a soundtrack of R&B and a tight line of barstools occupied by customers who might be best known locally as “Disco Doc” or “Stonewall Jackson.” There was room for dancing, if the spirit took you, and a corner stage where a local musician could get his start.

It was here that Sean Marshall learned to love music, long before he could even sit at the bar. He’s now a high-school teacher in North Carolina — and a Billboard-charted­ rapper under the name Official 3-2. But back in the ’70s, he was a kid in Southwest Philly, living upstairs from Wanda’s. The music wafted through the floorboards or poured out the doors, and he soaked it up by osmosis: Patti LaBelle, Gladys Knight, the Temptations, the Whispers. Half the stuff he samples, he’s pretty sure, is just a subliminal transmission from Wanda’s.

“There were so many regulars, it made me think of the television show Cheers,” Marshall says — a comparison made by seemingly every old head who knew the spot. He plans to name his next album Wanda’s Lounge, in tribute to the bar that helped shape him.

That tribute will also be a funeral. As of last year, Wanda’s Lounge is no more. It’s likely nothing similar will take its place soon — or open anywhere nearby. Bars come and go in any city, of course. But in Philly, the corner bars are mostly just going.

“It’s almost as if the neighborhood bar is quickly disappearing from Philadelphia,” says Paul Herron, one of the few liquor lawyers in the city who act as lonely boatmen, selling liquor licenses from dead businesses and ferrying them to new owners around town. Most licenses now go to well-heeled buyers in areas like Center City, Herron tells me. And indeed, Liquor Control Board records show the license from Wanda’s was snapped up by a Chicago-owned concern called Puttshack that promises an “upscale, tech-infused mini golf experience” in Rittenhouse Square, imbued with something the company calls “trendy vibes.”

There was a time, Herron says, that neighborhood bars accounted for a large share of the liquor licenses he sold in Philadelphia. The supply once seemed limitless. Now, it’s drying up. And it’s not just corner bars. The number of Philadelphia bars and restaurants with active liquor licenses has dropped dramatically in the past quarter-century, despite our much-touted restaurant boom. In 1997, more than 2,100 liquor licenses were reported in Philly. Today, there are about 1,300 active licenses, and more than 60 of these are taken up by a new crop of supermarkets and gas stations.

In that same period, the price of a liquor license has skyrocketed to heights the city had never seen. After remaining relatively stable for decades, prices shot up significantly faster than overall inflation over about 20 years — from $30,000 at the turn of the millennium to a peak of more than $200,000 just before the pandemic. If prices have dipped a little since, say brokers, it’s only because so many restaurants have closed.

This process has already begun to radically transform how and where we dine and drink in Philly — a shift fueled by unforgiving economics, arcane liquor laws designed to make the drinks business as inconvenient as possible, and a couple of little businesses named Wegmans and Wawa.

In most states in America, a restaurant liquor license is nothing more than a business permit: You apply, and maybe you get one. Fees might range from a few hundred bucks to a few thousand dollars. And then, as long as you follow the rules, you’re free to sell a crisp Singha beer with your platter of pad Thai.

But in Pennsylvania and New Jersey and a scattering of other states, restaurant liquor licenses function instead as portable real estate, traded like cattle futures to the highest bidder. That’s because the number of licenses is starkly capped. Licenses made before this cap was instated didn’t necessarily go away. They were grandfathered in, so Philadelphia — due to an explosion of licenses between 1933 and 1939, which we’ll get into in a bit — still has far more licenses than is technically allowed.

But if a county is above quota, new licenses are almost never created.

They’re also not destroyed, according to Liquor Control Board spokesman Shawn Kelly.­ Contrary to public perception, the board doesn’t get rid of licenses, though it might decline to renew the permits of scofflaws who don’t pay taxes or rack up violations. Some bar owners simply walk away and let their licenses expire.

Otherwise, licenses pass from owner to owner, and from location to location within the same county. They’re privately sold, usually when a business closes. And as supply­ gets scarce, they tend to fetch higher and higher prices, going for staggering sums of half a million dollars at auction in some Pennsylvania counties, foreclosing all but the most moneyed, well-connected or bold from starting a tavern. Bucks and Montgomery counties, long home to six-figure liquor licenses, have both seen prices well north of the quarter-million mark.

Famously boozy Philadelphia avoided this fate until relatively recently. But its account has finally come due.

To understand how this all came to be, to borrow a joke from Tom Waits, you’ve got to go all the way back to the Spanish-American­ War — or, actually, about 10 years before that. That’s the 1880s, when a man named Gifford Pinchot took a boat to Europe to study forestry. There, by some accounts, he had himself a bit of beer. Too much beer. Beer that shamed him. Or maybe he just watched all the Germans drinking too much.

Either way, he returned to Pennsylvania as the most crackling of “drys,” a crusading teetotaler firmly convinced of the evils of demon spirits. This came to matter quite a bit because when federal Prohibition ended in 1933, Pinchot was the governor here.

He charged himself with a mission: saving his home state from both violent bootleggers and the corrupting influence of alcohol. His solution was simple — just eliminate private profit from booze and give control of liquor sales to the state. Corruption solved!

With the 1933 creation of state stores and the Pennsylvania Liquor Control Board — which he promptly loaded with fellow Prohibitionists —  Pinchot helped install what became one of the more tortuous state liquor bureaucracies in America. Beer could be sold only by taverns or distributors. Wine and liquor were owned by the state. Six years later, the legislature threw in the added wrinkle of quotas, restricting the number of liquor licenses in each city or county.

At first, the cap was one liquor license per thousand people. But that limit was too high for the crusaders, including some mayors of Philadelphia. There were so many competing saloons on Delaware Avenue, mayor Richardson Dilworth complained in 1958, that there was no way they could make profits on liquor alone. They had to be fronts for “number writers, bookmakers and narcotics peddlers,” he opined.

With each big tweak of the liquor code, the caps were tightened.

The old licenses still persist, grandfathered into old age. But in theory, Philadelphia is allowed just 530 retail licenses — well under half the number of active holders today (and just a fraction of the nearly 3,900 licenses in the city as late as 1962). Inexorably, with each passing year, the number of licenses in Philadelphia sinks just a little closer to this appointed number.

The modern spike in liquor license prices, paradoxically, was fueled by freedom. More specifically, say license brokers, it followed a massive expansion of who can sell wine and beer in Pennsylvania.

Around 2007, chain supermarket Wegmans embarked on a grand legal experiment­ in Pennsylvania. Management looked at the state’s liquor license laws for restaurants, which required food service,­ more than 400 square feet of business space, and 30 chairs for guests to sit down, and asked a question: Are we not restaurants?­

In January 2007, a Wegmans near Scranton applied to buy a restaurant liquor license owned by a nearby Denny’s. That was quickly followed by six more applications, for six more Wegmans (Wegmanses?). Beer distributors, sensing an existential threat, sued to block them, but the Pennsylvania Supreme Court decided for Wegmans, kicking off a grocery-store buying spree for the same limited supply of licenses coveted by bars and restaurants. Customers rejoiced at their newfound ability to walk down to the local Acme and buy a beer. But within a few scant years, the price of a liquor license in Philly reached six figures.

This intensified in 2016, when Wawa and Sheetz got into the game via new laws that allowed gas stations into the mix and added six-packs to distributors and to-go wine to grocery stores and, soon, Di Bruno Bros. locations.

In Philadelphia, the effects were near-immediate.

“Oh, here we go: I sold a license in March 2016 for $140,000,” license broker Rich Hewitt, of Liquor License Sales PA-NJ, recalls. “Then, in February 2017 … ”

He pauses, double-checking a figure he doesn’t quite believe.

“I sold it for $199,000. Wow.”

Other counties saw even higher numbers:­ In Cumberland County, a Giant supermarket broke a state record in 2017 by paying $556,000 for a license in a public­ auction. Numbers like that change how people think — and how they act. A liquor license has become the single biggest asset most restaurants and bars own that isn’t real estate, leading many to think of those licenses as their retirement plan, according to Chuck Moran, of the Pennsylvania­ Licensed Beverage and Tavern­ Association.

He’s sympathetic to those who now have a hard time opening a tavern. But liquor licenses are an asset his organization will fight to protect against any efforts to lower their value.

“The people who already have the licenses, what they’ll tell you is that they took a risk years ago,” he said. “And they treat it like an investment. And they don’t want to see their investment decreased.”

In the meantime, many of those old corner bars have cashed out that retirement fund, especially during COVID. “That really precipitated the closing of a lot of the dive bars, or neighborhood bars. They just couldn’t make it through the pandemic,”­ says license lawyer Herron. “So their licenses­ came up for sale. And predictably, most of the licenses moved to places like Fishtown or Passyunk Avenue or Center City.”

In Philadelphia, we’re witnessing a great migration, Herron explains — not of people, but of liquor licenses. From the neighborhoods to the hotel district. From the corner bar to the Wawa. And from Wanda’s Lounge to Puttshack.

It’s worth remembering, though, that working around liquor laws is a longtime Philadelphia tradition, going back to the bad old days of Prohibition, when the city boasted 16,000 speakeasies — 10 times the number that serve alcohol now.

Philly chefs have responded to the dearth of affordable liquor licenses with startling inventiveness, in ways that have reshaped dining across the region. At Palizzi­ and Messina in South Philly, chefs have turned private social clubs into wine-filled destination dining. In Fishtown, refined Tulip Pasta and Wine Bar has established itself as a satellite to a local winery, so as to be able to serve you a glass of rosé. Next door in Montgomery County, fish-and-chips shop Yankee Chipper went so far as to turn itself into a nanobrewery, because it was easier to brew a keg of your own beer than to buy a liquor license.

And then there are the BYOBs — a dining­ scene that has exploded alongside the city’s liquor license prices. Though some of these, like Kalaya, have found ways to add wine and cocktails by taking on investors, fully half of Philadelphia magazine’s top 20 restaurants this year began as license-free restaurants.

At bustling Cambodian noodle house Mawn in the Italian Market, chef Phila Lorn says the $185,000 price he was quoted for a license didn’t make sense for the business. He and his wife would have had to change who they were as a BYOB, from a convivial spot to pour yourself some Hennessy into a place that had to turn tables and make money.

“If we wanted to have a liquor license, we wouldn’t have gone to 764 9th Street in the Italian Market,” he says. “We would have gone to 13th and Sansom.”

Juana Tamale’s Jennifer Zavala says much the same. She tried every business model under the sun before opening her fast-casual birria taco and ramen spot at the elbow of Passyunk Avenue and knows all too well the trade-offs that come with not serving liquor. “In the industry, they say the food pays your bills, but the liquor is your profit,” she says. “So right now, I’m just paying my bills.”

She has to charge more for her tacos to make ends meet; with booze on the menu, she could drop prices by $3. But to afford a liquor license, she’d have to take on an investor and probably move closer to Center City. She’d have to get a bigger place. She’d need a bigger menu, to appeal to more people. She’d have to be a different restaurant.

That back-of-the-envelope math is the whole problem, according to Jon Geeting, of nonprofit political advocacy group Philadelphia 3.0, which has long pushed for solutions to high liquor license prices. In other cities, restaurants and bars often lead the charge in revitalizing neighborhoods. But in Philly, successful businesses leave for Center City.

“It’s got to be cheaper for people to get in the game and get into some of these vacant storefronts,” he says.

He’s inspired by the ingenuity of chefs in dealing with a tough situation. But Philadelphians are cynical that anyone will ever make the laws better, he says — and few legislators seem to even be paying attention.­ Meantime, New Jersey, likewise facing $400,000 liquor licenses, is searching its soul for answers.

“It’s very much a public policy issue at this point in New Jersey,” he tells me. “There are bills in the legislature. People think it’s a problem, and they’re trying to do something about it.”

Some of the cost of such expensive licenses, Geeting says, is what doesn’t happen here — all the interesting places that won’t come into existence because starting a new business doesn’t seem possible.

East Passyunk’s tiny Fountain Porter opened a decade ago, right before the door snapped shut on what it aspired to be: a modern heir to the old-school neighborhood bar, with fair prices, a food menu that now consists mostly of excellent $6 cheeseburgers, and good taste, less calculated than personal.

The bar’s record player might spin obscure Chinese psych rock or off-brand Paul McCartney; its chalkboard menu is an equally private notion of what beer or wine is worth sharing. In its dogged simplicity,­ the bar is an expression of the people who run the place. But if they tried to open Fountain Porter today, says co-owner Evan Clancy, he’s not sure it could have happened the same way.

At the time, he was just a “bartender with a good idea.” He and partner Scott Pawlicky cobbled the place together with as much sweat as equity, taking on a silent investor who’s no longer involved with the bar.

If they’d had to pony up $150,000 or more for a liquor license, they might never have tried. At that point, an investor would have pretty much owned the bar — and the vision and business plan — potentially leaving them less free to offer dirt-cheap $2.50 Kenzingers at happy hour, those famously affordable burgers, or the health insurance Clancy is proud they’ve provided to employees­ since the early days of the bar.

An investor would want to make the money back, and offering health insurance doesn’t help much with that. Now, Clancy worries that Fountain Porter’s bartenders won’t find the same opportunity he had when he was a bartender — to follow­ up on their own good ideas and start their own places — and that the city will be worse off for it.

“Now, they would have to ask: Whose money are you going to take?” he says. “And what compromises to your idea are you going to have to accept?”

Published as “A Good Bar Is Hard to Find” in the July 2023 issue of Philadelphia magazine.