Restaurants Beware! One Bad Weekend May Put You Out of Business

If you have ever gotten lost looking for a “bar” in Virginia, don’t worry—there aren’t any.  In Virginia, any establishment that serves alcohol is required to serve food as well.

In order to sell beer and wine, the restaurant is required to have a full service kitchen.  And, in order to sell distilled spirits, the restaurant must ensure that no less than 45% of their gross receipts come from the sale of food.  In other words, the restaurant must make a concerted effort to sell food.  Failure to comply with this standard subjects the restaurant owner to possible fines, license suspension, or even license revocation by the Virginia Alcoholic Beverage Control Board.

Clearly it is in the best interests of restaurant owners to sell food.  After all, they are in the restaurant business.  However, sometimes their sales may not get to the 45% level.  This is more prevalent for restaurants that do a big nightclub business after dinner hours.  And with the development of high end alcohol, some restaurants have had problems making the 45%.  For example, a restaurant that sells rail vodka for $3 a drink has to generate a lot less food sales than it does for a Grey Goose Vodka at $7.

When judging whether a fine, suspension or revocation should be levied, the current model gives discretion to the ABC.  They can look to see if a restaurant has come close, got caught off guard because of increased sales of high end liquor, and whether the restaurant has a plan to fix the problem.

However, a new Senate Bill (SB 1349) recently proposed by Senator McEachin removes this flexibility, and replaces it with rigid penalties.  Under Senator McEachin’s plan, if a restaurant were to violate the 45% standard twice in TEN YEARS they would lose their distilled spirits license.  No exceptions.

I think it makes more sense to leave the system as it is.  There are too many variables in the restaurant business to set inflexible rules.  You can keep track of this bill for yourself by logging onto the General Assembly web site:  http://leg1.state.va.us/cgi-bin/legp504.exe?ses=131&typ=bil&val=sb1349

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