The Fine Line Between On & Off Premise

Over the last year, a bill was passed around the greater Massachusetts area, allowing restaurants to offer beer, wine, and cocktails to go.

Flashforward to June 2021, and the debate continues whether or not the emergency provision should continue. This month, lawmakers confirmed restaurants’ and bars’ continued ability to sell cocktails to go through until May 2022. While getting booze at just any store may not be an option, any restaurants are!

“DiZoglio, a Methuen Democrat who has pushed for the takeout drinks measures as a way to help restaurants recover from the COVID-19 pandemic and associated shutdowns, filed a bill (S 196) that would extend the authorization for to-go beer, wine and mixed drink sales until June 15, 2023 — two years beyond the end of the COVID-19 state of emergency.

Another bill (S 247), filed by Sen. John Velis, would permanently allow establishments with liquor licenses to sell beer and wine to-go.”

While this news is crucial for restaurants in order to stay afloat, it closely threatens the laws around alcohol consumption.

As Robert Mellion of MassPack put it: there are consequences when it comes to enabling serving alcohol off the premises. Not only that, but it is pinning on and off premise sales against one another, leading to vertical integration. Understandably, allowing consumers to carry premade cocktails out of an eating establishment does pose as an issue, but does it raise the likelihood of a customer choosing to crack open a tall boy upon leaving a liquor store? While laws do prohibit this, the same goes for restaurant-goers.

On the opposing side, Diana DiZoglio says, “the only other person to testify on to-go drinks legislation, pushed back against Mellion’s testimony, calling it “disgraceful” to “shift the blame for substance use disorder” onto restaurants.”

“I think if the gentleman before me has some challenges with alcohol being used in the commonwealth at all, and he’s serious about that, he probably wouldn’t be representing the package store industry and trying to monopolize the sale of alcohol in the commonwealth,” she said.

DiZoglio encourages engagement amongst local restaurants to demonstrate the significant role this law plays in enabling their business. She highlights, “how important this is and how much revenue it can generate, how much it’s been helping them, and how much residents actually are enjoying this new addition to our restaurant community.”

Balancing the scales between on and off premise is not an easy task: a steady give and take when it comes to law and supply, versus monetization and demand.

Although DiZoglio intends to see this become permanent where the scales will require more permanent stability, the initial reasoning behind this law was to stabilize these businesses’ operations and keep them running. There is no competition between on and off premise if one of them is nonexistent.

Most importantly, “[These restaurants] have been telling us how much of a tremendous impact this has had on them,” she said. “They have told us that they’ve been able to keep employees on the payroll, keep their lights on, pay their rent, pay their back rent.”

Priority lies among the on and off premise laws, keeping citizens safe while keeping businesses running.

 

If you enjoyed this article, you’ll love our monthly publication, The Advisor Magazine – click to view more articles like this in The Advisor Magazine – Issue #5.

 

Fun in the Sun: Hot Summer Trends & Updates

With summer in full swing, it appears nearly the entire country was open with little to no restrictions on the Fourth of July. The majority of states have lifted restrictions fully, while others such as Washington DC, California, and New York still require masks for unvaccinated people indoors, and Hawaii is the last state left with masks inside for all.

The conversation has flipped to the discussion around which laws to lift or continue to enforce, especially when it comes to the liquor world. A quarantine staple for much of the nation that’s been bored in the house, a distribution that did not require leaving the house was critical. That’s where e-commerce stepped in. Several platforms gave the ability to order alcohol from the comfort of your home or get it delivered.

Another exception to pre-pandemic liquor laws was the allowance of restaurants to offer takeout or delivery of beer, wine and, in some cases, spirits or pre-made cocktails.

While some fight for these changes to stick around long term, others find too many risk factors. These bills remain up for continuous debate as states weigh the pros and cons amidst navigating the new post-pandemic world. One bill that has been making its way through legislation is the ban on nips in Massachusetts. Mashpee on Cape Cod has officially set the precedent in banning them, with Falmouth following behind in October 2021, and Framingham brings forth a policy to ban the use of styrofoam, nips, and any other plastic resin.

In regards to new liquor policies around alcohol delivery, WCVB reports on several incidents involving a popular Boston beach. “Along the South Boston coast, lifeguards and Massachusetts State Police are also keeping a watchful eye on alcohol consumption, and trying to crack down on a new issue: alcohol deliveries.

Boston city councilor Ed Flynn said there have been numerous complaints of people ordering liquor deliveries to addresses along M Street or Carson Beach, and then bringing the alcohol onto the beach.”

These new era liquor policies are expected to experience several kinks, and while the battle is still being fought and bills continue to be passed, safety regulation and enforcement of the fine print remains priority.

 

If you enjoyed this article, you’ll love our monthly publication, The Advisor Magazine – click to view more articles like this in The Advisor Magazine – Issue #5.

 

Recovering, Reopening, & Rebounding: Current State of Restaurants & Bars

Throughout this unique time, a major question that has crossed the nation’s mind is- “What will happen to restaurants?”

Restaurants have and always will be a key part of commercialism in hospitality- but it does not just stop there. Agriculture, food and beverage purveyors, restaurant technology, and many more that developed their business models to supply the growing restaurant industry and employ millions more workers. The economic contribution of the restaurant industry was struck by layoffs of nearly 8 million employees.

A place of pastime, work, sustenance, reunion, celebration, enjoyment, dating, and tradition. The industry that may not have first come to mind when the pandemic hit but that lingers with us through it and has now come full circle with reopenings.
“Vaccinations are here, weather is warming, and restaurants in every state are now open at some capacity,” as Daily Seventy Fifty puts it. This article references 11 wholesalers to learn what ordering trends they are witnessing from their customers and what it tells us about the rebound for the drinks industry in coming months.

The Roaring 20’s are back and a metamorphosis has begun for the drink industry. On premise comes back to life as states roll back their restrictions. “’In the last 45 days, the on-premise channel has significantly exceeded our expectations,’ says Mark Fisher, the President of Sales and Marketing for Massachusetts-based Martignetti. Not surprisingly, the on-premise is up 325 percent compared to last year (according to Nielsen).”

With lack of entertainment options, little socialization let alone dating scenes, Millennials have been fueling this uptick since the winter months and will continue to fire up its resurgence, while recently vaccinated boomers are now adding support. Lastly, large gatherings are beginning to resume with increasing order volume for restocking venues. “People are beginning to make big plans for their deferred important events like graduations, weddings, anniversaries, and reunions, and businesses need to entertain clients. While much of this will occur next year, plans are falling into place now. Dining and large reservations for events including the Kentucky Derby and Indianapolis 500 will resume in our region.”

It is important to note that despite this spike in sales, the reopenings are not affecting off premise sales. In the near term, one expert predicts the numbers in retail to continue growing as the ready-to-drink category keeps climbing along with large spirit brands. In addition, restaurants are now condensing their wine lists “until buyers have more confidence in the future and their businesses are stabilized”. Smaller lists make it easier for staff and consumers alike, still offering premium wines in a less capital intensive manner.

As for in store wine sales, “We are seeing more opportunities for the niche and smaller producers,” says Jaime Rubin, Vice President Business Development at Massachusetts-based Ruby Wines. “Customers are spending more time in stores, allowing buyers to be able to reconnect and recommend new items; they are interested in trying new wines rather than quickly ordering curbside.”

Some states in the country have set a precedent for reopening numbers like Arizona, Texas, and Florida. Experiencing a V-shaped recovery curve, where some other states are predicted to come in like a lamb and out like a lion just as the seasons have. Despite cross country weather differences, Eric Stewart, the President and Owner of Vanguard Wines, harps on restaurants continuing their outdoor dining efforts for the long haul, preserving this new channel of business.

 

“It’s worth remembering that there has been tremendous trauma in the past year for hospitality—30 percent of on-premise licenses filed for bankruptcy in the last year,” adds Lombardo.

While optimistic for the coming months, McCollum, like most wholesalers, already has her eye on the end of the year. “Summer will be strong, but we really think the holidays and the ringing in of 2022 will bring a sense of euphoria!”

 

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Planning Past The Pandemic For The Liquor License Industry

Date With Destiny

It seems as though the scales have officially flipped where business restrictions are fewer and far between, while news of phase progression is becoming constant. The country reopens, history is being made, and a new air of hopefulness is stretched across the nation as we retreat from our long hibernation. And what better to do than head straight to your local bar, restaurant, concert, or sports game, any and all things we’ve held out on for over a year now. And many of which -for some of us- means having a drink and letting loose!

Business and market analysts are honing in to see where this new era takes the trends of e-commerce, delivery, wellness, small businesses, and altered mindsets of their consumers. There is an entirely fresh layer to the new normal and hopefully, this one provides a well-rounded, stimulating boom to the world of commerce & consumerism.

SevenFifty [an online marketplace and communications platform that helps importers, producers, distributors, and retail buyers connect with each other and do business in a modern world] did a recent piece on the transformation of alcohol distribution, how e-commerce is becoming a key player, and how wholesalers are responding. One of the most significant periods of modernization since the three-tier system was created in 1933, the article states.

Us vs Them

This transformative era has made niche businesses a foot into direct-to-consumer as well, providing artisanal, craft brands where they hadn’t originally fit in at wholesalers. Speakeasy Co. is just one example of a modern niche platform that enables producers to customize order pages right on their own website that are then provided by Speakeasy via local retailers. As CEO Josh Jacobs puts it, “‘This provides a seamless front-end experience for consumers while handling the backend for brands,’ explains Jacobs. By managing warehousing, fulfillment, and technology for suppliers, they are freed up to ‘focus on growth by owning the data and building customer relationships.’”

Similar to this case, Spirit Hub, independent distillery-focused e-commerce that allows customers to order and have curbside pick-up at one of many national retailers that CEO Michael Weiss is working with. And for all the vinos, Wine must not be forgotten, as it poses as another niche that Vivino hopped into as a marketplace partnering with wineries directly that then fulfills the consumer’s order through a local retailer.

These companies rave that the ability to get into this business while it is a standout need in the market has given them free reign to do what they’re best at, “finding the producers and marketing and getting out there in the world and building these brands. It allows us to be a more nimble and focused company.” An importer of Elenteny Imports explains. (Elenteny provides distribution services in some states which allow importers and producers to sell directly to accounts; in other states, they provide logistics and freight-forwarding services and work with a licensed distributor.)

On the opposite end of the spectrum, wholesalers are pressured to create more value for their buyers and for their consumers. What used to be free cookies and a slice of cheese at the deli, or the newest product offering a tasting, is now at the tips of consumer’s fingers right from their own home! It’s social media marketing, instant gratification, engagement and stimulation.

The wholesalers still have the leg up when it comes to well-developed quality + quantity of mass distribution, communication, the vitality of sales, and suppliers, all factors critical and essential to the growth and longevity of any business.

On-Demand In High Demand

“These are the resources to really help a smaller brand grow and be successful.” Besides, he [Michael Epstein, COO of the Massachusetts-based Horizon Beverage] adds, wholesalers, need emerging brands: “You never know when a brand is going to pop and become a big brand. You need these developmental brands in your portfolio because it’s a dynamic marketplace.”

Eventually, to survive, any platform is always going to be looking for the next better, faster, and cheaper system to rely on. It seems as though it will soon be a meeting of the minds, as online platforms have the upper hand on the customer-facing side when it comes to marketing, ease of access, and modern innovation. “When a product is promoted on Drizly, Breakthru could quickly see a 150 percent increase in sales at its local retail customers; he predicts that 20 percent of alcohol in the U.S. will soon shift online.” Like many online platforms are partnering with retailers to get the best of both worlds, it will be exciting to see which businesses come together to create a master machine of transformative alcohol supply and distribution.

 

If you enjoyed this article, you’ll love our monthly publication, The Advisor Magazine – click to view more articles like this in The Advisor Magazine – Issue #3.

 

Checking Out With Beer & Biscuits: UK’s Booze Crisis

Ubiquity versus exclusivity- an often difficult distinction to make, especially when considering various commodities. Britain recently rides the line by stripping alcohol from supermarket shelves, in an attempt to lower consumption. Alcohol consumption has encountered somewhat of a crisis when it comes to ‘lockdown drinking’ in which Daily Mail claims, “researchers say policies to clamp down on problem drinking would work better if the UK moved to a radical Scandinavian-style system where booze is sold exclusively in off-licenses.”

Several countries in the UK have proposed efforts to control liquor consumption including raising the prices of alcohol, which, as the article puts, “has rather embarrassingly failed to achieve its intended result in Scotland.”

With the ease and convenience of grocery stores selling alcohol, Taco Tuesday sounds even better with a margarita, a bottle of wine with dinner becomes daily, and weekend food shopping on Thursday turns into celebrating “Friday Jr.”

“For every 1 percent increase in the price of food, this translated into a 1 percent decrease in alcohol consumption.”

Studies depicted an intrinsic relationship between food and alcohol buying habits, emphasizing that the price is not the only variable up for debate. Raising the price, limiting the relationship to food, public disclosure of calorie count, as well as the dangers of drinking- all plans to be highlighted and adjusted.

In turn with this, managing poverty and obesity are tied into the decision. Public health minister Jo Churchill hopes that this is a win-win for their country.

The convenience of delivery or grocery store availability is unsurpassed- especially during a pandemic. However, will the exclusivity of booze only create a bigger stir and desire for it?

 

If you enjoyed this article, you’ll love our monthly publication, The Advisor Magazine – click to view more articles like this in The Advisor Magazine – Issue #3.

 

Ancient Egyptian Beer-Making: A Woman’s Job

 

The Ancient Egyptians (and most civilizations throughout history, frankly) are not known for being at the forefront of women’s rights. However, the art of brewing beer was almost exclusively female activity. What’s the big deal, you may be wondering? Well, beer was the lifeblood of civilization. It was a source of revelry, but also nutrition.

 

While the Sumerians had Ninkasi as the goddess of beer, the Egyptians had Tenenet to preside over beer-making. The earliest brewing would have been as simple as boiling down loaves of bread and letting them sit to ferment in large jars. The mixture was then strained and could be flavored with honey or herbs.

 

In just a few days, a clunky mess turned into drinkable beer which was consumed by the masses. It was drank before work to provide nutrients and energy, after work and at gatherings for relaxation and conversation, and sometimes used as money for bartering.

 

The drink would have been frothy and was drank with long straws out of bowls in order to avoid the grittiness that rose to the top. The Ancient Greeks marvelled at the Egyptian women and their brewing abilities, though they were not a fan of the product themselves and preferred wine.

 

In an age when women had little rights, brewing was a way to learn income and achieve a level of power and influence. Without them, there would be no beer. Without beer, then what?

 

Greg Caggiano is an avid food/drink blogger and the founder of Eating New Jersey. He lectures at Brookdale Community College on various historical subjects including the history of liquor and the history of prohibition in New Jersey.

“The Taste Must Be Acquired”: 5,000 Year Old Beer

 

A friend of mine who considers himself a beer historian used to remark, “Gotta hand it to the Sumerians. They invented writing…and beer!” Arguably two of the most important items in human history, they can be given credit for one of the world’s favorite beverages along with the Egyptians and Babylonians. We can even go a step further and surmise that they needed writing (in the form of cuneiform) to keep track of their beer recipe!

 

But what did it taste like?

 

It was a far cry from the beautiful, crisp, translucent complexion we are used to today. The Sumerians may have worshipped a Goddess of Beer (her name was Ninkasi) but complex filtering was still a ways off. The beer itself was actually quite murky, with a brownish consistency. Based on accounts of the time, we can liken beer to a watery gruel.

 

Also from the hieroglyphics, we can get an idea of how important beer was to the ancients in their everyday life: there are stories from 2,200 BC telling of mothers waiting at home for their children to arrive from school with a snack of “bread and beer”. For adults, such beer was drank out of long reeds and could have been done communally around a large pot (think of a Hookah set-up). The buzz was probably more important than the flavor, as even in 500 BC, an account reads, “the taste must be acquired”.

 

However, they did get one thing right. More than 4,000 years ago, an inscription was found stating, “The mouth of a perfectly contented man is filled with beer”. Ain’t that the truth?

 

Greg Caggiano is an avid food/drink blogger and the founder of Eating New Jersey. He lectures at Brookdale Community College on various historical subjects including the history of liquor and the history of prohibition in New Jersey.

 

How Bar Owners Can Protect Against Financial Losses From Staff

By Russ Bubas, President, Data Quest, LTD

 

Most restaurateurs know how to control liquor cost, but thanks to the fact that some of the “controls” can be tricky and time-consuming, they get skipped, causing costs to skyrocket. Studies of the industry show that 25%-30% of a bar’s liquor inventory never translates to registered sales, thanks to comps or discounts, over-pouring, spillage, and theft.

Here’s how to stop these types of incidents from happening.

Every restaurateur and bar owner has heard warnings about silent partners. Once in my career, I went to an upscale steakhouse to do an integrity audit at the bar. The bartender was polite, professional, and served my drink promptly. But as I placed the money on the bar for payment, he ignored it as he served the drink. That was the first clue.

A few minutes later, he served another customer, and collected money from him and from me at the same time. Only one drink was recorded, and it looked like my money went into a tip cup. When I called the owner to tell him, he replied, “Impossible! He’s been with us for 25 years. He’s like a member of my family.” I told him we should audit the terminal and take a look at the tip jar. I also advised bringing the bartender into the office to ask why he doesn’t collect from customers every time he serves.

Long story short, he did finally admit to stealing. The owner gave him the benefit of the doubt, offering him the opportunity to make restitution by the next day, then suspending him. The following day, the bartender walked in with a large shopping bag containing more than $7,700 in cash. He’d been using the money to save for retirement. The bartender was terminated, but the owner’s business was saved.

Around 62% of new businesses go out of business in the first year, largely because of unexplained losses. A bartender giving away drinks to generate larger tips has the same effect on the bottom line as if he put the money directly in his pocket. You have to protect yourself and your profits, so here are some tricks to spot warning signs:

 

 

 

 

Stay alert and skeptical of any unusual actions. Don’t let your staff audit the registers, but do conduct unannounced register audits.

A culture of honesty is important: Do frequent inventories, require open communication, and build in deterrents, like the register audits. These things will help you protect yourself, and encourage openness and honesty amongst your staff.

 

 

How to Control Your Liquor Cost—And Boost Profitability

By Robert P. Kiley, Chief Executive Officer, Restaurant Accounting Services

 

Most restaurateurs know how to control liquor cost, but thanks to the fact that some of the “controls” can be tricky and time-consuming, they get skipped, causing costs to skyrocket. Studies of the industry show that 25%-30% of a bar’s liquor inventory never translates to registered sales, thanks to comps or discounts, over-pouring, spillage, and theft.

 

Here’s how to stop these types of incidents from happening.

 

1. Check in on your bartenders.

 


Start with the basics: Require service bartenders to use jiggers, since the customers can’t see them, anyway. If bartenders are visible to customers, test the pours of the bartenders. Random inspections will help you make sure they aren’t pouring “heavy,” coupled with testing their pouring ability frequently. Another thing to make sure of is that bartenders are required to ring all transactions for sales immediately, and drink recipes should be consistent and readily available.

 

2. Manage inventory.

 

Rule of thumb: Establish proper par levels, and keep as little on hand as possible. The less inventory employees see, the less waste from heavy pouring. Keep liquor locked, and establish a system for using bottle-for-bottle exchange.

 

Even better, have a weekly inventory with a programmed point-of-sale system and tally of beverage cost. The more often inventory is taken, the more we can police the cost. In addition to taking total inventory by category (i.e. liquor, beer, wine, and non-alcoholic beverages), your point-of-sale system needs to tally sales by these categories as well.

 

 

3. Keep several guidelines in mind.

 

There are a few key guidelines to keep in mind, which can be broken down with simple math.

Beverage Cost = (Beverage Purchases +/- Inventory Change)/ Total Beverage Sales

Some math to break it down…

Liquor sales for the month: $40,000            100.00%

Liquor purchases for the month: $7,560            18.90% ($7,560 divided by $40,000)

Inventory Change: + $280 + 07.%

Total Cost: $7,840 19.60% ($7,840 divided by $40,000)

Beverage cost percentage: 19.6%
This calculation should be done for beer, wine and non-alcoholic beverages as well.

Successful restaurants generate total beverage costs in the mid-20% range. Generally, a liquor cost of 20%, a beer cost of 25%, wine cost of 30%, and non-alcoholic beverage cost of 25% are acceptable.

Control and calculating your beverage cost are essential tools in increasing profitability.

 

 

5 Tips for Getting (and Keeping) A Liquor License in a State With a Quota

By Gene Richard, Esq., Wayne, Richard & Hurwitz, LLP

 

A business can’t legally sell alcoholic beverages to consumers without a valid liquor license. Since profits from sales of alcoholic beverages can make or break a restaurant, hotel, club or package store, getting that retail liquor license is important—only second to keeping it. Here’s what you need to know.

 

1. Availability varies.

 


Retail liquor licenses are issued by each city or town, with the approval of the state Alcoholic Beverages Control Commission (ABCC). That means only limited numbers of each type of license are available in each municipality.

 

A town or city that is “below quota” can issue a new license directly to qualified applicants. However, once a town or city is “at quota,” an unlicensed business has to wait for an existing license to be turned in, or pay an existing licensee to transfer the license to a new holder.

 

New licenses typically cost two or three thousand dollars, and that’s just for application and annual license fees. The cost to buy an existing license involves the same fees, plus whatever price the existing licensee charges, which varies based on location and type of license (however, a head’s up: It can run well into the six-figure range).

 

 

2. Make sure you go over the nitty-gritty details.

 

Applications for new licenses or license transfers must be made via forms from the ABCC. The basic forms are available on the ABCC’s website, along with a helpful checklist of documents that need to be submitted with each type of application. Remember to check in with licensing authorities in your municipality, just in case additional forms are required. More tips about applications:

 

1. Fill the forms out completely. Failure to disclose relevant facts can be grounds to deny the application, or revoke a license that was already granted.

2. Attach copies of your lease or other evidence of your right to occupy the property. Although premises can be under construction at the time of application, no license will be issued until the premise has been inspected by the authorities.

3. Each person with an interest in the license must be disclosed and approved. That includes: Individual owners, those working with a corporation, LLC, partnership, or association (including officers, directors, and shareholders), and the applicant’s landlord (if the lease includes a rent provision that is based on the sale of alcoholic beverages).

4. Corporate licensees must designate and disclose an individual manager.

5. The initial costs and financing for the license have to be included: Your application needs to show all the costs involved in obtaining the license and getting the businesses up and running.

6. Individuals who have an interest in the licensee have to sign and submit personal information forms (PIFs) and criminal records requests (CORIs) as part of the application. This includes your landlord if that aforementioned rent provision is in play, and might also include owners and entities that own stock in the licensee.

7. Apply for a tax Certificate of Good Standing. The ABCC can’t approve a license issuance if either the new or the old licensee owes taxes to the state.

 

 

3. Pay wholesalers.

 

Your “purchase and sale” agreement with the former licensee should include that the new licensee is not accepting liabilities of the original business. Make sure to check whether the license is on the “delinquency list” kept for liquor wholesalers, and ensure that wholesalers on the list are paid before the transfer.

 

4. Prepare to go through the process again in the future.

 

Once your application is approved and the license is issued, you might have to go through the process all over again for any number of reasons. For example, if your manager quits, you’ll need a new license, and to get that manager approved. Approval has to be obtained for a change in location or new stock, too.

 

5. Remember to renew annually.

 

Check in with your local licensing authorities in your municipality for specifications on “automatic renewal” or submitting a renewal application. Most municipalities require that documentation of liquor liability insurance and inspection certificates are included with the renewal form, and you’ll still need to be up-to-date on your taxes and payment of the annual license fee.

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