The question of whether your restaurant needs a liquor license is a simple one: If you plan to sell alcohol, your restaurant needs a liquor license. The sale of alcohol can boost restaurant revenues, because liquor and beer have great profit margins and low labor cost (it’s a lot easier and faster to prepare a martini than coq au vin).
If you’re opening a restaurant and want to sell liquor on the premises, then start the liquor-license process at once, to avoid delays and hassles later on.
Selling Liquor is a Big Commitment
Selling alcohol comes with responsibilities. States don’t want just anyone selling liquor; they require restaurants and businesses to apply for a liquor license to help maintain control and enforce liquor-related regulations.
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 can cost.
Research Your State’s Liquor License Requirements
Before you can set up your restaurant’s bar, you will need to research your local liquor laws. Then, you’ll need to take steps to acquire your liquor license: You can’t sell even one drink without it. You will need to get in touch with your particular state’s Alcohol Beverage Control (ABC) agency, as they are in charge of dispensing your liquor license. You’ll find that liquor laws can vary between cities, counties, and states, so don’t assume it’s the same across state lines or even county lines. However, here are some laws you will find throughout the United States:
- Limit of one drink per customer at a time;
- Unfinished bottles of wine may not be taken home;
- 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.
Restaurant Liquor Licenses: Apply Fast, Apply Early
It’s a good idea to apply for your liquor license as soon as you can, as the application process can take up to a year to complete. This is especially true if your state has a liquor license quota. This means that they issue only a set number of licenses, depending on the population.
Your liquor license application may be posted in the local newspaper to see if anyone wants to contest your application. If they do, you’ll have to deal with the licensing authority. Expect your application to be investigated very thoroughly.
The Qualifications You Need
The qualifications for obtaining a liquor license vary, but many states have similar requirements, as follows:
- You must be 21. (You can only sell alcohol if you’re old enough to drink it.)
- You may encounter residency requirements, which means you may have to live somewhere for 90 days before applying for the license.
- If you have a criminal record you’ll have a much harder time getting a liquor license.
- Get a seller’s permit from your State Department of Revenue first – before you apply for the liquor license.
- You and your staff may have to take a responsible beverage server training course before you get your license.
Types of Liquor Licenses
As you start looking into applying for a liquor license, you’ll run across several different types of licenses, which are usually organized by the type of alcohol you will be serving and the kind of establishment you will be serving it in. Some licenses allow only beer and wine, while others allow all types of 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 in-house beer or wine.
A standard restaurant liquor license allows you to sell beer, wine, and liquor as long as the proceeds don’t exceed more than 40% of your total revenue. The size of your restaurant might affect this license. A tavern license is for places that sell food, but specialize in drinks; it usually costs more than a standard restaurant license. If you’re a small restaurant with fewer than 100 seats, and you want to serve only beer and wine, you can apply for a limited liquor license, which is restrictive but inexpensive. In addition, you’ll probably find it easier and less expensive to get a beer and wine license than one that includes hard liquor.
The Costs of a Restaurant Liquor License
The costs of liquor licenses vary widely: from city to city, and from state to state. In New Mexico, for example, liquor licenses have sold for as much as $975,000, and they average between $300,000 and $600,000. In Colorado, on the other hand, the most expensive liquor licenses cost less than $2,500. The high cost in some states is linked to quotas for the number of licenses sold, per the number of residents. In these states, licenses are often bought in a secondary market, from someone who obtained one from the state at least two years earlier, making them more expensive.
What If Your License Gets Denied?
Your license can be denied or revoked if you don’t comply with the liquor laws of your state; if excessive complaints are lodged against you; or if you fail to pay the annual licensing fee. If you are denied a license due to criminal activity, you can ask someone who can hold a license to partner with you. If it’s a zoning issue, research avenues for getting the ban lifted, or find a new location. No matter what, always pay your licensing fees and fines on time and in full.
Practice Responsible Liquor Habits in Your Restaurant
Being a sensible and reliable restaurant owner means understanding the responsibilities that come along with serving alcohol. 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 that will teach them how to serve alcohol responsibly and how to deal with inebriated customers. Also, make sure that your wait staff is fully versed in your state’s alcohol laws, and that they know what to do in various situations. It should be understood that they must check a customer’s ID so they don’t mistakenly serve a minor. A responsible bartender must be ready to cut off the liquor supply to intoxicated guests. Knowing when it’s legal and illegal to serve drinks will not only help you avoid fines, but it can also keep you from getting your license suspended.
In addition – and this is important, once you have your liquor license – always keep an accurate inventory of your liquor. This helps you ensure that no one is skimming off the top and doing anything illegal to jeopardize your license.
Liquor License for a Complete Business
Restaurants need a liquor license if they are going to sell beer, wine, and liquor to their customers. You might find that some diners won’t even look at a restaurant that doesn’t serve liquor because they want a complete dining experience. However, understanding that a liquor license comes with a big set of responsibilities that you and your staff must be able to deal with, will help you use your license wisely and responsibly. Begin the application for a liquor license as soon as you decide to get one. It’s an important step, and one that can help you see your profits increase tremendously.