All About Restaurant Liquor Licenses
How to Apply for a Liquor License
The sale of alcohol can boost restaurant profits because liquor and beer have great profit margins and low labor cost (it’s a lot easier and faster to prepare a martini than a hamburger with fries). However, selling alcohol comes with responsibilities. States don’t want just anyone selling liquor. Therefore they require restaurants and businesses to apply for a liquor license.
Specific liquor laws vary from state to state and even from town to town. Here are just a few of the areas that general liquor laws cover:
- When liquor can be served.
- Where liquor can be served.
- What containers liquor can be served in.
- How much liquor can be served at a time.
- To whom liquor can be served.
- How much liquor costs.
Liquor laws that directly affect restaurants, pubs, and taverns also vary. Here are few laws you may find throughout the United States:
- No discounts on liquor- no happy hour or two-for-one specials.
- Limit of one drink per customer at a time.
- Unfinished bottles of wine may not be taken home.
- No alcohol sales on Election Day (Idaho).
- Wholesale beer, wine, and liquor vendors cannot sell to a restaurant that does not have a valid liquor license.
- Insurance companies will not cover claims related to alcohol if there is no valid liquor license in place.
Types of Liquor Licenses
Within the hospitality industry are many different types of liquor licenses. Some allow only beer and wine, while others allow all hard liquor. Here are the most common types of licenses for new restaurants:
- Beer and Wine Liquor License: no hard liquor or spirits.
- Restaurant Liquor License: the most general of liquor licenses, also called an all liquor license.
- Tavern Liquor License: for an establishment that offers food, but whose sales are more than 50% liquor.
- Brewpub Liquor License: may be needed if you plan to make your own beer or wine.
Definitions of these liquor licenses vary from state to state. You should incorporate the restaurant liquor license fee into your restaurant business plan, as part of the start-up costs. If you are buying an existing restaurant, you may be able to transfer the liquor license and pay a pro-rated fee, or you might have to buy a whole new license and pay the entire fee. Liquor licenses have to be renewed every year, so keep the price in mind when you are selecting a license.
Applying for a Liquor License
Before you open a new restaurant you need to apply for a liquor license. This can take up to a year, so be sure to apply early. Depending on where you live, a restaurant liquor license can cost a little as $500 or as much as $70,000. Many towns have a liquor license quota, so you may not be able to get a new license at all if the quota has been filled.
The application process to apply for a liquor license can be extensive. If you have any previous criminal record you may have to submit a letter explaining the situation. Towns or states can refuse a liquor license because of past conduct. Typically a license application must first be approved by a town council and the public is allowed to attend the meeting, where they can voice their own opinions on the restaurant liquor license. Then the application (and that big fat processing fee) goes to the state for approval.
Once you have your restaurant liquor license and are ready to open, it is a good idea to send your wait staff to a TIPS training course, which will teach them how to serve alcohol responsibly and how to deal with drunk customers.