Quick casual restaurants, such as Chipotle Mexican Grill, Burgerville, and Subway, and coffee shops, including Starbucks, are adding alcohol to their menus to attract customers and increase sales. Burgerville recently added wine and beer to one of its restaurants in Vancouver, Washington. Starbucks announced in July that it is re-branding one of its existing locations in Seattle to 15th Avenue Coffee and Tea and will offer wine and beer as part of this effort.
Before you jump on the bandwagon, make sure you understand what is involved in obtaining a liquor license and how it may impact your employees, operations, management and costs.
The Application. Obtaining a liquor license can be a complex, expensive process if problems arise. State liquor control commissions frequently require substantial disclosures from all owners of the business. If an applicant has had financial, legal or personal troubles or fails to disclose material information as required by state law, they may not be approved. Prospective applicants should conduct a self-assessment to identify any potential red flags before submitting an application and consult an experienced attorney to address any such issues proactively. Once the applicant receives their license, they are a “licensee” and subject to the state’s alcohol regulatory framework. For more information about how to obtain a liquor license in Oregon, visit http://www.oregon.gov/OLCC/how_to_get_a_liquor_license.shtml.
Employees. Each state has different requirements regarding the requirements for individuals that are involved in the preparation and sale of alcoholic beverages. Most states require that such individuals take a class, pass an exam and receive approval from the state liquor control commission.
In Oregon, all employees that mix, sell or serve alcohol, or that supervise others that mix, sell or serve alcohol, must have a service permit. This includes employees that ring up checks with alcohol on them, collect money from customers for alcohol, or delivery drinks to a table. To obtain a service permit, the employee must be at least 18 years old, complete an Alcohol Server Education Class and submit all the required paperwork and fees. Special restrictions apply to service permittees under the age of 20.
Operations. Licensees operating quick casual restaurants or coffee shops may need to restructure their operations to ensure compliance. It’s likely that not all of a licensee’s employees will have service permits and that some may be under 21, or even under 18. The licensee is ultimately responsible for any violation and must ensure that operations do not inadvertently result in violations. For example, individuals without server permits and those under 18 are categorically prohibited from mixing, selling or serving alcohol. Licensees are responsible for establishing policies and procedures that satisfy the state’s alcohol regulatory regime.
Ongoing Compliance. Adding a liquor license to an establishment often requires greater management oversight. Violations are time consuming and expensive, and fees and penalties typically escalate for repeat offenses. A history of violations is not only expensive, but often draws greater attention from enforcement agents and, ultimately, jeopardizes the license.
Licensees often need to have a stronger management presence at the premise to ensure compliance. Common violations are serving alcohol to minors and failure of an employee to have a non-expired service permit. However, there are many more potential pitfalls and each state presents its own unique set of rules and prohibitions. New licensees often learn the hard way when they first receive their license. The best practice is to implement a comprehensive alcohol service policy and to conduct regular, on-going trainings. Although adding alcohol to the menu generally results in increased sales, it also involves increased costs as well.
In sum, adding alcohol to the menu is often an attractive proposition, but it is not a panacea and should not be undertaken lightly. Those considering adding alcohol to their quick casual restaurant and coffee shop should look before they leap and fully understand the legal requirements of their state.