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Getting the spirit 

Mike’s Place sets the pace for a booze-fueled restaurant boom in dry counties.

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If you accept William Faulkner's maxim that distillation is civilization, then it follows that Arkansas is an enclave of barbarism. Of the state's 75 counties, 43 prohibit the sale of alcohol.

But rules are made to be avoided. A 2003 change in state law has spurred many new private club permits in what, for all the world, look like restaurants, and fine ones at that. No more are the club permits limited to the country club for rich folks and the VFW or Moose Lodge for everyone else.

The state Alcoholic Beverage Control Division issued 29 private-club permits in dry counties in 2007. Although ABC doesn't distinguish between restaurants and other clubs in its records, ABC director Michael Langley said most private-club permits issued last year were to restaurants.

A pioneer in this shift was Mike's Place, a New Orleans-style steakhouse co-managed by Mike Coats and Mike Kraft. It is located in Conway, the seat of sober Faulkner County. When ABC granted Mike's Place a permit in August 2004, it was the first Conway restaurant to go wet. And it's a good one. Our readers voted it the best in Arkansas outside Pulaski County (at least partly a result of a heavy concentration of Times readers in Faulkner County).

Alcohol didn't come to Conway easily. Although a 1969 Arkansas statute allowed private clubs to serve alcohol, restaurants were typically unable to claim themselves private clubs. To change that, Brad Lacy, head of the Conway Chamber of Commerce, helped establish Citizens for a Progressive Arkansas, a non-profit that advocated blue-law liberalization. After a lobbying campaign, the legislature amended the law in 2003 to require the state to consider a region's economic development when granting private-club permits.

The change made it easier for restaurants in a growing city like Conway to serve alcohol. The permit process requires some accounting acrobatics, however. Each private club in Arkansas is required to register as a non-profit. The regulations ensure that restaurants in dry counties don't make money from alcohol sales. Still, it's a counterintuitive classification — although restaurants can be hard-pressed to bring home the bacon whatever their tax structure. “Almost any new restaurant can be a non-profit because you don't make money for the first few years,” said Coats.

Under state requirements, a non-profit wishing to serve alcohol must be in existence for at least a year and have a hundred members before ABC issues a private-club permit. In the case of Mike's Place, that organization was already in place with Citizens for a Progressive Arkansas, which supported Coats and Kraft. Citizens for a Progressive Arkansas is now registered to Coats and covers some of the expenses for Mike's Place, including those for taxes, alcohol and rent. It is controlled by Limestone Partners, a for-profit limited liability company that gives Coats and Kraft an investment vehicle for future business.

The dry-county permits entail an added level of cost (lawyers to negotiate with ABC were expensive) and bureaucracy (“We couldn't even have bar stools!” Coats said). As the first Conway restaurant to serve alcohol, Mike's Place came under especially strict scrutiny. According to Coats, he and Kraft even underwent a dead-end investigation by the FBI, which suspected they had bought the private-club permit from ABC.

Despite the red tape, Mike's Place opened in June 2005 in a converted strip of Front Street stores. The restaurant got off to a fairly quick start — albeit “not gangbusters like we were expecting,” said Kraft. Part of the foot-dragging can be attributed to the novelty of a Conway restaurant serving booze. “There were people whispering to themselves: Should I get a drink?” Kraft said.

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