Eatery Owners Object to Lcb Proposal Board Chairman Opposes Markup

By Langley, Karen | Pittsburgh Post-Gazette (Pittsburgh, PA), August 14, 2014 | Go to article overview

Eatery Owners Object to Lcb Proposal Board Chairman Opposes Markup


Langley, Karen, Pittsburgh Post-Gazette (Pittsburgh, PA)


HARRISBURG - The disclosure of an internal Liquor Control Board proposal to raise the markup on wine and spirits has Pennsylvania restaurants protesting, though the board's chairman says the plan is not on the agenda and does not have his support.

In a July 30 memo, the LCB's finance director proposed the agency boost its price markup from 30 to 35 percent because of steep increases in the cost of employee benefits, such as pensions and health care. The agency expects a net income this year of $96.2 million, 20 percent less than the $120.7 million it reported for the 2013-14 year, August Hehemann wrote.

LCB chairman Joseph E. "Skip" Brion said in a telephone interview that the three-member board received the financial analysis in an executive session July 30 but has not put a change in markup on its agenda. He said he opposes such an increase and believes the board should look for other ways to absorb the increasing personnel costs.

"Any markup discussion by the board would be a last resort," he said.

In the memo, Mr. Hehemann wrote that it is difficult to predict how vendors would respond to an increase in LCB markup. Some vendors might lower their prices to maintain a particular shelf price, he wrote, and others would wait to see how competitors responded.

"If a markup were to occur, hypothetically, the vendor then would have to make a decision as to whether they would increase the price or not," Mr. Brion said.

Restaurateurs in Pittsburgh and elsewhere in southwestern Pennsylvania said they believe an increase in markup would be passed along. Kevin Joyce, owner of The Carlton Restaurant on Grant Street, called it "absurd" to think vendors would not raise their prices in response. And he noted that taxes are levied after the markup.

"This would be devastating to our industry," he said. "This is a major, major cost increase. …

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