Selling Liquor 101: Learn Exactly What It Really Takes To Serve Alcohol in Your Restaurant
The Rezku Team
With the promise of great margins and happy customers, more restaurants are interested in serving alcohol. This short guide will clue you in on what you need to know before you commit to selling beer, wine or spirits in your restaurant.
Topics to Cover:
- If serving alcohol is right for you
- Resources for state liquor licensing
- Understanding restaurant liquor service laws
- Rules about alcohol service certifications for staff
- How to provide responsible alcohol service
- Tips for identifying and dealing with drunks patrons
The Pros & Cons: Deciding to Sell or Not
While serving alcohol can be a profitable move for your restaurant it’s important to weigh the pros and cons.
Cons: Why not to serve alcohol in your restaurant
It’s important to acknowledge some of the potential down sides of serving alcohol in your restaurant.
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If it’s not “on brand” for your concept.
Some examples where alcohol might not fit in are brands targeting families with children, the health-conscious or if you primarily serve breakfast.
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If you’re not prepared for the potential of unruly customers.
Since alcohol affects people’s moods in different ways, there is an increased chance of loud, obnoxious customers who may be a danger to themselves, staff and other patrons.
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If the additional costs aren’t worth it.
Factor in the cost of training, licensing, fees, insurance and equipment. It can add up quickly. Make sure there is sufficient demand for alcohol service by talking to regulars and creating sales projections ahead of time.
Pros: Serving alcohol could be a profitable enhancement to your business
Of course, there are also good reasons for restaurants to serve alcohol.
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A competitive advantage
The difficulty in obtaining a liquor license crates scarcity, which can help your restaurant stand out against the competition.
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Customer demand
Certain food and drink pairings just go together naturally. Like pizza and beer or sushi and sake. Customers may have an expectation of alcohol availability in these contexts. Or your regulars have expressed that would enjoy a drink with their meal.
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Liquor can be a major profit center
Margins on alcohol are great and account for 21% of sales in restaurants serving. Who wouldn’t like to see that additional revenue on their balance sheet?
Obtaining a Liquor License
If you decide to sell alcohol in your restaurant, the first thing you need to learn about is your state’s liquor license process.
Be aware, this can be an excruciating and expensive endeavor ranging from $100 to over $40,000 depending on the state.
The process, fees and requirements are different in every state.
Here are some examples:
| State | Agency | Estimated Cost |
|---|---|---|
| New York | Liquor Authority | $100 to $200 application fee, $1,000 penal bond, $330 to $4,352 biennial or triennial state licensing fee |
| California | Department of Alcoholic Beverage Control | $110 to $17,335 application fee, $275 to $1,450 annual state licensing fee |
| Utah | Alcoholic Beverage Control | $75 to $330 application fee, $250 to $2,750 initial licensing fee, $350 to $2,000 annual state license renewal fee |
How to get a Liquor License in All 50 States
To avoid pitfalls, make sure to research diligently and carefully plan ahead with your local Alcohol Beverage Control (ABC) office.
There is no guarantee that you will be successful in obtaining a restaurant liquor license. To avoid sunk costs and disappointment, do not build a bar or install equipment to serve alcohol before you have completed the licensing process.
Additional considerations to be aware of
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State issuance quotas — Some states have a cap on the number of liquor licenses available for issue in the state. If the cap been reached, you’ll be on a long waiting list until one becomes available.
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Liquor license transfers – Instead of applying for a new license with the state, you may be able to obtain a license through a business transfer. This can still be a challenging process and laws vary per state.
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Liquor license auctions – Some states, like California, auction liquor licenses, which drives up the cost.
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Contesting — Your license can be contested by locals. If they are not happy with the idea of alcohol being served in their community, you’ll have to go through further steps. You can appeal. But you may not win.
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Zoning and local ordinances — You may not be allowed to sell alcohol at all if there are local restrictions. For example, laws restricting the sale of alcohol in proximity to schools and churches. Work with the city to get clear information.
The process of applying for a liquor license is quite involved. It’s a continual back and forth conversation with your local alcohol control board, and the city. Expect multiple rounds of form-filing, and accompanying fees.
Contact your state alcohol control board (ABC) early on in the process to let them know your intention. You can find more information here.
List of state alcohol beverage control boards
General requirements for receiving a liquor license
Although each state is unique in the process, we can provide some general guidelines about what to expect.
- You must have a valid Seller’s Permit from your state before applying for a liquor license.
- Only individuals over 21 are legally allowed to serve or sell alcohol.
- Managers and other restaurant staff may be required to take classes or receive certification for responsible alcohol service.
- If you have a criminal record, it will be difficult or impossible to obtain a liquor license.
Choosing a Classes of Liquor License
There are “hard” and “soft” alcohol licenses. Unless you plan to add a full bar to your restaurant, there may be an easier path to serving alcohol.
Many restaurants opt for a soft liquor license that allows the sale of just beer and wine. This type of license is generally cheaper and easier to obtain compared to a full liquor license that permits the sale of hard liquors and cocktails.
Since beer and wine are commonly paired with food items, a beer and wine license provides sufficient alcoholic beverage options for most restaurant concepts.
The lower costs and reduced regulatory requirements associated with a beer and wine license make it a more sensible choice for many restaurants, offering a favorable return on the effort required to acquire and maintain it.
Restaurant Liquor Service Laws
There are complicated laws you must obey regarding who is allowed to serve and be served in the restaurant. These rules vary from state to state, and can sometimes be unexpected or quirky. Your local Alcohol Control Board will help you navigate the particulars.
Here are some examples of rules you may not expect:
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Generally, a minor is allowed to enter an order for alcohol on the POS, but is not permitted pour, deliver it to a guest or bus.
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You can only serve alcohol to patrons over 21 years old, but some states allow children to drink alcohol when a parent is present.
Service laws vary widely, so work with the ABC be sure not to violate you liquor license.
Here is a list maintained by the Department of the Treasury, with links to the Alcohol Beverage Control Board for each US state, Canada, and Puerto Rico.
Mandatory Alcohol Service Certification
Check with the ABC to find out if your restaurant staff is required to complete a training program, such as the National Restaurant Association’s ServSafe Alcohol program.
There are other similar programs that may or may not be approved by your state for certification purposes. Some states provide free resources for training staff on safe alcohol serving. Contact your local Alcohol Beverage Control office for Responsible Alcohol Service training programs that they recommend.
Even if you are not required by state or local laws, it is still a good idea to provide training on alcohol service to your staff anyway.
Avoiding Over-Serving
Identifying Intoxicated Guests The key principle of responsible alcohol service is avoiding over-serving and identifying intoxicated guests. Your hosts are the first line of defense, as they can help determine if guests have arrived pre-intoxicated and notify servers and bartenders.
Care should be taken however, as certain disabilities can present similar signs to alcoholic intoxication. Body-language cues like slurred speech and stumbling may be due to a neurological or muscular disorder rather than intoxication. To avoid offending guests, careful judgement must be used.
Keeping Track Of Drinks Another principle is for servers and bartenders to keep track of drinks ordered by guests, and follow the restaurants policy on service.
The human body takes on average one hour to process the alcohol from a single drink. A “drink” is defined as one of the following:
- a 5oz. glass of wine
- a 12oz. beer
- a single-shot (1oz.) of liquor
- 1 mixed drink or cocktail (made with 1oz. of liquor)
As a rule of thumb, guests who have ordered a third drink within the hour should be watched closely and evaluated before served another drink. You may want to ask front-of-house staff to alert management if guests have had more than three drinks.
Management may choose to chat with a guest and evaluate their level of intoxication and notify the rest of the team.
The ability to process alcohol varies greatly from person to person, based on all many factors. The ultimate judgment for how many drinks to serve rests with the bartenders, servers, and managers of the restaurant.
Dealing With Intoxicated Restaurant Guests
Not cutting off a patron before they are drunk can lead to some dramatic situations – even life and death.
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Over serving, whether intentional or due to neglect, can put your liquor license at risk and open your business up to legal trouble.
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Drunk patrons can create negative experiences and safety issues for other guests and staff, through verbal or physical confrontations.
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If law enforcement has to be called, they may be reporting the number of incidents to the ABC, which can put your liquor license in jeopardy.
Watch closely for these signs of intoxication:
- People who return quickly to the bar for more drinks
- Guests who are talking louder than other tables
- Guests interacting with multiple groups or tables
- Individuals with wet or glassy eyes
- Signs of decreased motor control such as stumbling
- More frequent use of the bathroom
How to Cut Off Intoxicated Patrons
Empower your bartenders, managers, and servers to use their best judgment to identify and cut-off intoxicated guests.
As a manager, stand behind your staff’s decisions to cut-off a guest if they don’t feel comfortable serving them more drinks.
After they have been cut-off, a drunk customer may try to order a drink from another employee. This is where teamwork and communication are essential.
Once a guest is cut off by one staff member, honor that decision with the rest of the team, and remain firm.
Techniques for cutting off a guest: How you cut off a customer can also help to keep things de-escalated. The goal is not to embarrass or create a negative experience for your intoxicated guests. At the same time, it is important that they understand that they’re not buying any more drinks.
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A technique for bartenders is when the guest returns to the bar, close their tab and serve them a large tumbler of water with the check. Smile and use a friendly comment like “We appreciate your business. We’ll be happy to serve you again tomorrow” to make it clear.
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When serving a table, ask if they need to add any specific items like apps or desert, then close out their check. Servers can also offer to provide the guest with a non-alcoholic drink on the house.
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You’re probably not the only one who has identified they’re intoxicated. Enlisting the help of their sober friend to apply a little social pressure can get the message across.
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Use a phrase like “You guys are having a good time, how do you plan on getting home?” is another subtle indicator to your guest that they’ve had enough to drink. Offering to arrange safe transport by cab, Uber or Lyft can help ensure everyone’s safety.
Removing Belligerent Drunks From the Premises
Sometimes no matter how nice you are, a drunk guest will need to be asked leave the restaurant in order to maintain the safety and quality of service for others.
It’s important to remain confident when communicating with drunk guests. While intoxicated, they may be quick to anger if they perceive they are being disrespected.
Communicate care and that you want them to have a safe night.
If a guest has been asked leave becomes confrontational, it’s important to deal with the situation swiftly. Take the customer outside the restaurant and do not allow them back in.
If a drunk customer becomes belligerent or violent, contacting law enforcement protects everyone involved. Resist the temptation to engage with or provoke a situation. But don’t let them back into the restaurant.
It is prudent to make sure staff are trained in dealing with drunk customers and a team member is designated to perform this duty on behalf of the restaurant.
A Note On Drunk Driving
Be aware, as a restaurant who sends a home an intoxicated guest, you may be held liable for any injuries they cause, due to being over-served. To avoid this liability, arrange a ride share service to pick them up or insist they contact a friend to get a ride.
The best way to avoid liability is not to serve guests who are already intoxicated and not to over-serve guests in the first place.
Conclusion
The choice of whether to serve alcohol in your restaurant deserves careful consideration. If you want to serve alcohol, understand that getting a liquor license can be a complicated and expensive process without guarantee of approval.
Understand the importance of responsible alcohol service and the additional training and certification requirements for staff. Maintain vigilance to avoid over serving guests, which can lead to safety issues and legal liability.
This guide for restaurants serving alcohol is part of a free library of resources provided by Rezku. Rezku is a leading restaurant management technology solutions provider. Learn more about Rezku on our home page..
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