Navigating the landscape of TABC permits, licenses, and certificates can be a perplexing endeavor when embarking on the journey of opening a bar or restaurant. The TABC Food and Beverage Certificate often sparks the question, "Do I need this since I'm selling food?" The answer isn't a one-size-fits-all, as the necessity or desire for a Food and Beverage Certificate hinges on various factors.
In this blog, we'll discuss whether this certificate is a requirement or a choice for your establishment. We will explore the eligibility options, requirements, and the audit process for certificate holders. Understanding these guidelines will help businesses make informed decisions regarding whether they need the certificate and help them ensure ongoing compliance.
Who Needs a TABC Food & Beverage Certificate?
Before discussing the benefits of a TABC Food and Beverage Certificate, it's essential to clarify what it is not. Contrary to popular belief, this certificate is not required to sell food in an establishment permitted to sell alcoholic beverages. In other words, if you plan to sell food, obtaining a Food and Beverage Certificate is not a mandatory requirement from the TABC. It is required, however, in certain locations and under certain circumstances.
Operating in a “Partially Wet” Location
In Texas, there exist regions designated as "dry areas," where the local community has cast their votes against permitting the sale of alcohol for on-premises consumption. In some locations, the sale of alcoholic beverages is sanctioned, contingent on being served alongside food–the TABC refers to areas as “partially wet.” In such instances, acquiring and maintaining a TABC liquor license requires a Food & Beverage Certificate be held as a secondary permit. In other words, this certificate empowers TABC permit holders to conduct operations in locales where alcohol sales are allowed in restaurants but restricted in bars.
Closer Proximity to Protected Places
Apart from the wet/dry classification, another factor that could impede a business owner from obtaining a TABC liquor license is the establishment's proximity to designated protected places such as churches, schools, hospitals, and day-care facilities. Possessing a Food and Beverage Certificate can serve as a strategic tool for a business owner seeking a liquor license in locations that might otherwise be restricted. For instance, if a business owner seeks a liquor license near a school or day-care facility and concurrently applies for a Food and Beverage Certificate, it may increase the likelihood of obtaining approval for a liquor license in a location where it would typically be prohibited.
Selling Alcoholic Beverages to Go
Among the valuable benefits of holding a Food and Beverage Certificate is the permission it grants to TABC Mixed Beverage Permit Holders for selling alcoholic beverages to-go, a trend that gained widespread popularity during the COVID-19 pandemic.
Recognizing the demand for this service, the Texas Legislature took action and enshrined alcohol-to-go sales into law in 2021. The legislation clarified, however, that only establishments with a Food and Beverage Certificate can participate in this lucrative opportunity. This distinction gives certificate holders the ability to cater to customers' preferences for convenient takeaway options while adhering to legal requirements.
The Texas Restaurant Association recently collaborated with the TABC to produce an incredibly informative webinar regarding alcohol to go compliance. In addition, the TABC offers extensive information on its website about alcohol-to-go.
Who Can Hold a Food and Beverage Certificate?
To qualify for a TABC Food and Beverage Certificate, businesses must meet specific criteria under Texas law. This “subordinate” permit is dependent on holding a primary permit, which can be one of the following: Mixed Beverage Permit, Wine and Malt Beverage Retailer’s Permit, or Retail Dealer’s On-Premises License.
Beyond holding the applicable primary permit, there are two options for eligibility:
Option One: Qualification Based on “Restaurant” Status
The business meets the definition of a "restaurant" as specified in Section 1.04(29) of the Alcoholic Beverage Code. This means operating a permanent food service facility with commercial cooking equipment on the premises and offering multiple entrees for consumption on or off-site. Note that partnering with third-party food trucks or separate entities for food service does not meet the requirement under this option.
Option Two: Qualification Based on Sales Percentage
Alternatively, businesses can qualify for a TABC Food and Beverage Certificate based on alcohol sales comprising 60 percent or less of the total sales from the location. Notably, Option 2 also allows third-party entities to count toward the food sales requirement. To ensure accurate recording of these sales, the permit holder must provide the TABC with the name and sales tax permit number of the third party (this usually happens at the application stage). Additionally, the third party is responsible for submitting monthly sales tax reports to the Texas Comptroller associated with the specific location of the permit holder.
What are the Requirements that Accompany a Food & Beverage Certificate?
Regardless of the chosen eligibility option, certain requirements apply to all Food and Beverage Certificate holders. These include offering multiple entrees, maintaining permanent food service facilities, and aligning the hours of food and alcohol sales (alcohol can only be sold if food is also being sold).
What is the Cost of a Food & Beverage Certificate?
The cost of obtaining a TABC Food and Beverage Certificate is influenced by several factors. Initially, businesses must factor in the expenses associated with obtaining the primary permit, such as a Mixed Beverage Permit, Wine and Malt Beverage Retailer's Permit, or Retail Dealer's On-Premises License. These primary permits entail application fees and annual renewal fees.
Next, businesses need to consider the costs associated with meeting the eligibility requirements for the certificate. For instance, if a business opts for Option One based on restaurant status, they should account for the cost of adding commercial cooking equipment if it's not already present in their establishment, and any related city permitting costs.
As of November 2023, the TABC fee for the Food and Beverage Certificate stands at $1,100. Notably, the TABC does not prorate this fee if a Food & Beverage Certificate (or any subordinate permit) is requested during the term of a primary permit. Instead, the new Food and Beverage Certificate will only be valid until the expiration of the primary permit. To avoid paying for a Food and Beverage Certificate twice in a short period, it's essential to identify the renewal date of the primary permit.
For example, suppose a business's mixed beverage permit expires in July 2023, and they obtain their Food and Beverage Certificate in June 2023. In that case, they will be required to pay the full fee for the Food and Beverage Certificate in June and again in July. In such scenarios, it may be prudent to wait before applying for the Food and Beverage Certificate if the primary permit is close to renewal. Careful consideration of these costs can help businesses make informed decisions regarding their pursuit of a TABC Food and Beverage Certificate.
How Does the TABC Confirm Food & Beverage Certificate Requirements?
Food and Beverage Certificate holders will likely get audited by the TABC. This typically involves three main components:
Premises Inspection: TABC will review the food service facilities on the licensed premises, including any third-party food preparation areas.
Sales Records Review: Certificate holders qualifying based on business sales must maintain records with separate totals for alcoholic beverage sales, food sales, and other categories. TABC will examine the most recent 12 months of alcohol invoices and sales tax reports to verify total sales. If a third party is responsible for food service, ensure they are regularly reporting the necessary information to the Comptroller.
Food Menu Review: TABC will conduct a thorough review of the food menu offered by the establishment.
Being well-prepared for the audit will significantly contribute to a smooth and successful process. It is essential to maintain accurate records, comply with all necessary reporting requirements, and ensure that your establishment maintains permanent food service facilities. By having all documentation readily available, businesses can confidently participate in the audit and maintain their Food and Beverage Certificate status.
Understanding the benefits, eligibility options, requirements, cost and the audit process associated with the TABC Food and Beverage Certificate ensures your ability to make an informed decision regarding whether this secondary permit would be a helpful addition to your establishment. Once acquired, it’s important to keep these guidelines top of mind as failure to maintain ongoing compliance will jeopardize your ability to maintain the permit.
Still have questions about how to get a liquor license? Contact Us or Book a consultation with Ashley, attorney for Storm Ruleman, PLLC.
Disclaimer: This information is intended for educational purposes only. Nothing in our articles or on our website is legal advice and should not be taken as such. Please address all legal questions to your counsel.
