Bars Reclassify as Restaurants to Stay Open
Bars have been struggling throughout the pandemic. On-premises alcohol sales have been strictly controlled since businesses initially closed back in April. Health experts cite multiple super spreader events of COVID-19 and some bars/tasting rooms have closed down voluntarily due to customers not following health and safety guidelines.
In California, after bars were allowed to reopen for indoor dining, new COVID-19 cases spiked leading many health experts to believe it may be too dangerous to allow bars to stay open. This line of thinking has forced many bars that are properly following health and safety guidelines to close through no fault of their own.
Some bars in Texas have found a clever loophole and have been able to reclassify themselves as restaurants to avoid closure.
The Texas Alcoholic Beverage Commission has allowed bars to rezone as restaurants if they can prove they are making more than 50% of their revenue from non-alcoholic products or services. The 50% can exclude cocktail takeout as restaurants are also allowed to sell alcohol off-premises and pose less of a risk to public health and safety. Any establishment that wants to open must also have a kitchen and/or have permanent food menu items that are available to customers at all times.
To date, 380 bars have successfully reclassified as restaurants and have been issued food and beverage certificates with another 80 bars awaiting approval.
Many breweries also benefitted from the new ruling. Breweries are shifting to a mainly off-premises alcohol sales model which allows breweries to open for outdoor seating.
For bars that are attempting to meet the 50% threshold to qualify for the rezone they are either increasing their kitchen space or are adding on-premises food trucks to significantly increase their food offerings. Any bar that has shown an effort to increase food sales can apply to reclassify.
But this rule cuts both ways as restaurants inadvertently may rezone as bars.
“When the 51 percent sign was used at that measure they found themselves, while they were serving a tremendous amount of food, they found themselves being forced to close,” said Emily Williams Knight, CEO of the Texas Restaurant Association.
According to the TRA, roughly about 1,500 restaurants inadvertently sold more than 51 percent of their gross receipts as on-premises alcohol sales and may be forced to close.
If implemented in other cities, this approach may be a better system than a blanket mandate for entire sectors of industry to open or close. Instead, establishments that are properly following health and safety guidelines can remain open while establishments that endanger public safety should close.
Some other major cities are considering similar systems but so far there is little indication that this will be widely implemented.
