Don’t get us wrong, you’ll need a license to sell and serve beers, wines, and any alcoholic beverages. The real question is, do you really need one for the kind of operation you run?
Acquiring a liquor license involves a lot of paperwork, waiting around, and, of course, a small to hefty capital. Rules vary in every state and costs can be crazy high, especially in quota-based areas. In these places, they go for hundreds of thousands of dollars! A liquor license in Idaho will set you back by $180,000 and $381,000 in New Mexico.
Even worse, these states are most likely at capacity already and won’t entertain new applicants. You might be forced to buy a license from an existing business but at outrageous costs! This is why it is important to understand if adding liquor to your menu makes sense for your business.
Types of Licenses
First, you should know that there are several types of liquor license. An all-liquor license lets you serve any type of alcoholic drink whereas a beer and wine license won’t allow hard liquor. There are a few thousands of dollars in between these two that will make a world of difference with your decision. Whether or not the alcohol will be consumed on the premises is also a point of discussion.
Really consider if adding liquor on the menu fits your restaurant’s concept.
Alcohol is always a subject of interest when starting or expanding a foodservice business. No surprise there--liquor is an attraction in itself that can draw in a crowd to your restaurant or bar.
With margins up to 40%, it is an excellent way to make money and recoup your costs. Plus, it also gives you better marketing opportunities and online presence if you do it right.
It all sounds good on paper, but before you jump in, ask yourself: Is it going to be profitable for the kind of business I run? Does it make sense for my concept? Is alcohol going to be an important part of my operation? These can be very loaded questions, so we’re here to help you find answers.
Whether it is a new customer or increased food sales, you must get the value out of your liquor license. You can’t approach it with a one-size-fits-all mindset. Your business will generate unique needs.
Knowing Your Location and Clientele Inside Out
Recent research shows that high-earners like doctors and lawyers like to drink than most. We also found that some people would immediately dismiss a restaurant that serves alcohol. There are non-drinkers who are more inclined to enjoy the dining experience or social interactions without liquor. There are people literally going to the internet to find out your alcohol availability in considering your restaurant. Just check Trip Advisor.
Can you get to these people? Do you already have them on your current customer base?
Are you in a bustling city or a business center? Some people like a good pint of beer directly after work. Meanwhile, if you are in a Muslim area, alcohol probably isn’t going to be popular.
What’s your clientele and the potential customers in the vicinity like? Take a look at the age, gender, income level, and even religion and relationship status. How many of them are drinkers? Find out what they value most in the experience and ask for their input, if possible. Put yourself in their shoes and understand their habits.
If your restaurant is already successful without a liquor license, you may have a clientele that is very satisfied with what you have to offer.
If there are plenty of restaurants nearby with a similar concept as you, alcohol sale can potentially keep things fresh and help you stay competitive. Stay up to date with upcoming zoning developments in your area that could hurt your business. Keep an eye out for new or existing liquor or grocery stores that could impact your sales.
The Latest Trend in Drinking Culture
A 2018 study on U.S. alcohol consumption has shown that Americans drank less alcohol in the past year, a trend that has been going on for three straight years. This is believed to be the result of adopting a healthier lifestyle.
When they do indulge themselves in alcoholic beverages, drinkers preferred spirits and wine over beer although as you know, customers aren’t just into one thing and always like to have options.
What Time Do You Operate and What Kind of Dervice Do You Offer?
Not every business is the same. If socialization or leisure is your bread and butter, booze will almost always help you provide the complete experience expected of you.
Also, keep in mind that your business hours are a contributing factor to the kind of liquor license you will need. The later you serve, the higher the cost. Sunday alcohol sale also bumps up the price. For example, you are charged an extra $400 to sell on Sunday in Delaware.
Bed and Breakfast
If your business mostly happens in the morning, a liquor license may not be practical.
In a bed and breakfast, alcohol probably won’t fit in the menu.
However, recent trends show restaurant owners looking into the possibility of attracting more evening customers and adding to the bottom line using liquor.
It will help if you are in a remote location where there aren’t a lot of restaurant options for guests. But you have to make sure that the liquor license is getting more people to buy food or you are confident you’ll be able at least cover the costs of the liquor license and other expenses that come with the upgrade.
Getting a liquor license is a more no-brainer decision for a golf club than it is for a family restaurant. Many of them serve at least beer and wine just to make the experience “tolerable” and more enjoyable for the adults.
However, keep in mind that some parents may feel uncomfortable taking their children to a place where alcohol is served. This is where your understanding and connection with your clientele makes a difference.
If your main customer base is kids, beer and wine options will still be a great way to keep the adults happy. However, if your business attracts as many adults as there are families, then adding hard liquor will make more sense.
If your restaurant gets a lot of business from catering, being able to offer booze will be a major plus!
The concept of coffee bars is becoming more popular. Entrepreneurs are incorporating liquor to their menu. Offering booze by itself, if not creating coffee-infused brews can differentiate your brand from the rest. It can also bring in new types of customers and improve what would otherwise be slower periods of the day.
Make sure the change makes sense for your business though. Starbucks once tried offering beer and wine, which ended up being quite disastrous. This is what we mean when we said it doesn’t work for everybody. Maybe the worldwide recognition proved a burden in this scenario, so smaller or starting businesses might fare better.
Alcohol could be enough reason for customers to choose a fast-casual over a quick-serve or casual-dining restaurant. It is also a big plus for those who prefer full-service restaurants.
Additionally, with a liquor license, your business has the potential to be a millennial hangout. New research shows millennials prefer a fast-casual restaurant that offers options to drink alcoholic beverages during their stay.
To remain faithful the core concept of a fast-casual, however, the service should be speedy. You might need to hire more staff members just to maintain the speed. You will also need to invest in equipment such as a beer dispenser, back bar cooler, bottle cooler, or keg cooler, which CKitchen has a good selection to get you started.
If you travel and serve alcohol in multiple locations, you would need a license for each and every one. A single liquor license can already be pretty expensive, so operating like this could run you dry.
Can You Even Afford a Liquor License?
In California, a liquor license is priced $14,000. In some states, it is far cheaper. Miami allows you to sell beer, wine, and spirits for $1,820. Check with your state and plan accordingly.
If you are in an area with limited availability, a liquor license can be very difficult to come by. Surely, getting one will definitely put your business at a competitive advantage, but with financial pressure that will leave a huge dent on your budget, this isn’t a ride that most business owners should take on lightly.
Most of the time, the regulatory board where you are will select the lucky licensee through a bidding war or lottery. If you’re unlucky, you’re left with very constricting options. You can either wait for a new license to become available as the population increases or buy a license from a current establishment at what is likely going to be an astronomic price.
Financing agencies can give you the monetary resources you need to jumpstart the process. However, there is a less expensive alternative you may find interesting.
A Beer and Wine License is the Next Best Thing
A beer and wine license is the sweet spot and is a great way to integrate alcohol to your operation without breaking the bank. It is way, way cheaper ($1,060 vs. $4,352 in New York City) and has greater availability.
All you have to do is to tap into your visionary self. Let the entanglements of liquor licenses get the creative juices flowing! You’ll be amazed at how the disparity in price and availability doesn’t change much of the leeway you can get. Sure, it has its restrictions, but that’s where you put your creative mind to work!
With the likes of gin, whiskey, tequila, and rum off the table, you can simply find ways to replicate the taste and experience with wine or low-alcohol cocktails.
A Beverage Menu that Your Customers Will Actually Like
Sometimes, you only need to make your drink selection interesting enough to your guests. If they aren’t going to like it, what’s the point? So it becomes less about adding alcohol on the menu. How you incorporate it makes all the difference in the world.
Before looking into a liquor license, consider creative non-alcoholic drinks that are unique enough and might facilitate the same social experience that your customers are looking for. Many restaurants have found success in doing this.
In some cases, customers would like to remain sober and still be able to indulge in alcoholic goodness, so strong liquor doesn’t really matter.
A beer and wine license also generally allows “BYOB” or bring your own booze. It can help bring the costs down and still give you that profit boost and variety you seek. This is a route you can consider if your customers are on a budget or are careful with spending, and if you don’t have the proper setup for a full-on bar.
The beauty of it is that you can do BYOB and still offer in-house booze. If they don’t like what you have, they can bring their choice of alcohol and you can offer mixes and garnishes or provide glassware and pour it throughout the meal for a small price. Either way, you still make money.
Is a Liquor License the Only Way to Increase Revenue?
Explore more affordable options that would make more sense for your service. Take a look at what you currently have and how you can improve your operation without adding alcohol to the mix.
Sit down and really think about it. Maybe it’s your marketing that needs some work or your menu might need a little updating. Reflect on how well do you communicate your food services to potential customers from foot, vehicle, and even social media traffic. Find out if these factors may be holding you back.
What Do You Have on the Menu?
Alcohol and food go hand in hand. When they complement each other, customers enjoy both and are bound to order more.
However, liquor isn’t always a good match for the menu and the overall experience it entails. There are just some foods that will always be better enjoyed with alcohol, like pizza.
Develop a beverage program that presents your food at its best. However, make sure you also tailor the menu to your patrons to ensure it adds to the experience without straying from your restaurant concept.
How’s Your Marketing and Promotion Strategy?
You can use the concept of happy hour and apply it on your food menu. Offer discounted meals (those that are easy and quick to cook) during your slow periods or at a designated hour where you know there is increased foot traffic you can take advantage of.
Additionally, be confident in your culinary offerings. Show them off! Give customers a primer for the experience. Display prices and the kind of foods they can order. Showcase them on the storefront or share mouth-watering photos of the meals on social media.
Is Your Business Ready for the Responsibilities that Come with Alcohol Sale?
Determine if your business itself can keep up with the adjustments that will come with adding alcoholic drinks.
Remember that having alcohol availability is opening yourself up to risks of theft and violence both at the back and front house.
You want your employees to have the knowledge and the people skills to operate the bar and attend to customers. They should be observant and alert to identify which guests to watch closely. And if it comes to it, they should be able to handle intoxicated or unruly customers.
Also, minors are generally allowed to work in a licensed restaurant, but they typically won’t be allowed to serve or sell alcoholic drinks. These younger employees might be tempted to serve customers their age, especially if they are friends with them. It all comes down to choosing responsible and trustworthy people to be the face of your business.
You can’t have your staff nicking your inventory and chugging down the booze at work. At the same time, you need to keep your customers in check. They can’t get too intoxicated and steal glasses or beer. In line with this, you will need to enhance your security, so a guard, especially during evening service, becomes necessary.
Apart from the actual drink prep, ID checking will now become protocol to avoid serving liquor to underage guests. So, anticipate the few seconds or minutes this will add to your service.
Equipment and Storage
You need to stock the booze somewhere. Depending on your business, you might need to make constructional changes to your establishment to accommodate your alcohol service.
You will also need to invest in energy-efficient equipment and high-quality drinkware to ensure they are well-preserved and perfect for serving. We can help with that with our rich selection of back bar, bottle, and keg coolers with different sizes and configurations to meet your needs.
Liquor licenses need to be renewed every one to three years. Make the process easier and even cheaper by maintaining a good standing with your local agency.
Take care of customers and follow the rules--you put your business in everybody’s good graces. You can probably get it automatically renewed for a smaller fee. Talk about win-win-win.
Is a Liquor License for You?
Overall, a liquor license can be a great thing to have, but it is a decision that you should go into with preparation. A liquor license involves a tedious application and vetting process. You’re also betting so much of your time and financial resources on it, so make sure it is right for your business.