As the top-bidders were announced for the Pennsylvania Liquor Control Board (PLCB) Ninth Restaurant License Auction, anybody that has been paying attention to the results of the previous auctions can notice a trend.
The Auction Trend
We have previously written about the trends of the auctions leaning toward lower winning bids, and that was apparent again in this auction. However, the bigger trend that is reemerging from the initial auctions is the domination by grocery, convenience, and big-box stores.
Let’s take a look at the numbers. Of the 25 licenses available in this auction, only 20 licenses received qualifying bids. Like the last few auctions, this auction again had licenses that were available and received zero bids (or, at minimum, zero qualifying bids).
The biggest statistic of this auction is the complete domination by grocery, convenience, and big-box stores. Of the 20 licenses that received bids, 13 were won by entities or persons that we can definitively determine are grocery, convenience, or big-box stores. There could be more, but that could not be determined based upon the listed name of the high bidder.
In the last auction, Wal-Mart made its initial appearance and future intentions known in winning its first auction license. In this auction, Wal-Mart was the successful high bidder on five licenses located in Beaver, Blair, Clearfield, Erie, and Westmoreland Counties. It is not a stretch to say that Wal-Mart will be a major player in the forthcoming auctions, just as Giant, Weis, and Sheetz have been in previous auctions.
This auction also included the continuation of another new bidder from the last auction, Wawa. Like the last auction, Wawa was the successful bidder for one license located in Delaware County. In addition to Wal-Mart and Wawa, the familiar names to the auctions of Weis and Sheetz were successful bidders again.
The dominance of these auctions by grocery, convenience, or big-box stores is not going to end anytime soon. In fact, there are some major players in each category that have not started bidding or won any licenses in the first nine auctions.
There is a concern in the restaurant industry regarding the rapid acquisition of available licenses by grocery and convenience stores and whether that will inhibit future restauranteurs from finding a license to open their businesses. That may come true, but the acquisition of licenses by these businesses through the auction system is, at least, not taking up licenses from the open market.