A Restaurant Liquor License - Deciding to Serve Alcohol

When it comes to opening a restaurant one of the major decisions that you will have to make is whether or not to become licensed to serve alcohol.

When consumed in moderation, alcohol goes well with any kind of cuisine and many people can't imagine having a casual or fine dining experience without it. Alcohol sales can be very lucrative for a restaurant and many restaurants make up to two thirds of their profit from the sale of beer, wine and other liquor. However, while alcohol can be a substantial source of revenue for your restaurant business, serving it is also a big responsibility.

There are advantages and disadvantages to having a restaurant liquor license and it's wise to look at both sides of the question. Read on for more information.

Restaurant Liquor Markup

As alcohol doesn't require the preparation and handling that food does it offers restaurant owners much better profit margins. Restaurants that buy a bottle of wine for $12 for example can decant it by the glass, charge $7 per serving and make a killing (note that one 750 ml bottle contains roughly five servings). If you are lucky enough to have clientele that purchase premium wines then the profit potential can be mind blowing. Beer is also quite profitable and can allow a restaurant to markup a bottle by 300% or more.

Consider Your Concept and Market

Make sure that the alcohol that you serve fits in with your restaurant concept. If you serve Mediterranean foods then try to stock wines from the south of Europe. If your specialty is Thai food then make sure that you stock Thai beer.

If you do decide to serve alcohol, don't begin with a huge inventory. Start with a few kinds of wine, beer and mixed drinks until you find out what your clientele prefer and what price level they will go to, particularly with fine wines.

Liquor Laws Vary

There are different laws to adhere to depending on the part of the country that you are in. You must observe these laws meticulously and make sure that your employees do too, otherwise you risk losing your restaurant liquor license.

Depending on your local licensing requirements you may be restricted as to when you can serve alcohol and how it must be served. You may also be restricted in the way that you can price and promote alcoholic beverages. In some cities you are not allowed to discount alcohol or offer specials such as 'two for the price of one'. Licenses can also be divided into those for on-premises consumption and those for off-premises consumption.

Lastly, the kind of alcohol that you sell may also be regulated. You may find that it is easier to get a license only to serve beer and wine rather than a general license that includes spirits as well.

The Application Process

Liquor licenses usually don't come cheap so you should find out what you will be facing and budget for this in your startup costs.

The process to apply for a license is extensive. If you are buying an existing restaurant business you may be able to apply to have the license transferred over to you but otherwise you need to start the process from scratch. If approved, your liquor license will have to be renewed every year.

In your application you may need to show how you are planning on mitigating the negative effects of alcohol consumption. It is also likely that you will need to include a background check to prove that you don't have a criminal record. The approval process also usually gives local people a chance to disapprove of a license being granted if they can back up their opinions with solid reasoning. As you can imagine the application period can be long so you should start the application process as soon as possible.

Quotas

In many towns, liquor licenses are allocated on a quota system. Under such a system a license becomes a commodity that becomes more valuable as demand for them increases. In such locations, your license really can be an investment.

Disadvantages

One of the biggest disadvantages of having a liquor license is that you may be held liable if your patrons have an accident and cause damages to somebody or something as a result of drinking in your restaurant. You are not only liable on your business premises but you may be held liable for the actions of your customers after they have left your restaurant. You absolutely must take out liquor liability insurance to protect yourself and your business in such circumstances.

Drunk and disorderly customers can become a problem for your restaurant and this can negatively affect the experience of other diners.

You may also have to deal with employee theft when you serve alcohol. Over-pouring for larger tips or stealing liquor are a few of the things that you must be concerned about.

You will need to set aside a bar area that complies with your states laws concerning coolers, sinks and sanitation and you'll have to invest in the necessary glassware and other items.

Staff Training

Be sure to set policies that make it easy for your employees while keeping your customers as safe and happy as possible. Give staff some guidance and training so that they know how to serve alcohol in a responsible manner and they know how to deal with customers who are drunk and disruptive.

A restaurant liquor license has both positive and negative aspects. If you understand the requirements and set strict policies when you start a restaurant there is no reason why sales of alcohol cannot double your profits and enhance the atmosphere of your establishment.