Business Basics: What My Consultant Taught Me

For anyone who hasn't been a part of the restaurant industry, liquor licenses might not seem like a particularly big deal. Most restaurants serve alcohol, after all, so how difficult can the process to acquire one really be? Unfortunately, the answer to this varies quite a bit from state to state and the application procedure can sometimes be arduous. In some cases, acquiring a liquor license might actually require negotiating with a current license holder in order to buy one from them. Understanding why this is potentially so difficult (and what you can do about it for your restaurant) requires a little bit of education on how liquor licensing actually works.

Quota vs. Non-Quota States

Although some of the details can change from state to state, most states broadly fall into one of two categories: quota or non-quota. Quota states limit the total number of licenses that can be sold on a per-county basis. This means that at any given time, there is a limited number of licenses available. Depending on the state, these quotas may be separate for different types of licenses. Unfortunately, the cost of acquiring a license in a quota state can be expensive. Since a limited number of licenses are available, it is often necessary to buy one from a current holder, sometimes for exceptionally high prices.

Understanding License Types

As if the quota system wasn't enough, you will also need to consider the type of license that you are after. As a restaurant owner, you will need a license that authorizes you to sell alcohol that will be consumed on your premises. Depending on your particular jurisdiction, you may also need a more specific license for your establishment as well. In many cases, different licenses are required for bars versus restaurants. In other cases, the lower levels of licenses may not authorize you to sell hard liquors.

Note that many jurisdictions have extremely granular licensing types. Connecticut, for example, has over forty different types of on-premise licenses alone. These are usually broken down by the specific category the business falls into, so a casino requires a different license from a club or a winery. Certain states also require that specific licenses are used if a certain portion of your business' total sales are made from alcohol.

Getting Through to the Other Side

If all of this seems overwhelming, you aren't alone. If this is your first time launching a business that will serve alcohol, it is a good idea to spend some time speaking with a licensing consultant. These businesses can help you to determine which licenses you need for your restaurant and get you through the application process with a minimal amount of pain and expense. You can get more information from a company like this.