The cost of a liquor license varies significantly, according to municipal codes and state requirements. They can be as inexpensive as $30 in some areas, and upwards of $12,000 in others. It depends on what type of liquor license you need, and where you are. For example, in Southern California, a restaurant’s liquor license typically costs about $12,000 to establish, with an $800 per year renewal fee.
Restaurants should always ensure that their liquor license is in place before they begin serving alcohol on the premises or they can be held liable for liquor-related accidents, be fined for operating without a legal license, and invalidate any and all insurance on their business until the problem is resolved.
What types of liquor license are there?
The type of liquor license your restaurant needs largely depends on the types of alcohol it intends to serve, how it will be served, and what the focus of the business is as a whole. The three most common forms of liquor licenses for restaurants are: restaurant liquor licenses, tavern liquor licenses, and limited liquor licenses.
A standard restaurant license limits the proceeds made from alcohol sales to no more than 40% of a business’s total revenue. There are a limited number of these licenses handed out and, though the law varies by state, they typically require a restaurant to have a certain number of tables to qualify. It gives the restaurant the ability to serve beer, wine, liquor-based mixed drinks, and straight distilled liquors.
A tavern license is designed for restaurants that serve food, but still predominately specialize in drinks. If your business may, in any month, make more than half its revenue from alcohol sales, you need a tavern license. This is less expensive than a bar license but more expensive than a standard restaurant license.
A small restaurant, specifically one with less than 100 seats, that only intends to serve beer and wine, can get a limited liquor license. These are extremely inexpensive, but are also very restrictive. Distilled liquor and mixed drinks of any kind are banned under this license. The alcohol content of wine may also be limited to a certain base percentage as well.
What happens to a liquor license when the business moves or changes ownership?
That really depends on local law, but in most cases it can be transferred. If the business changes municipalities, it will need to reapply with the new governing body, but if it moves locally, it can simply transfer the license to the new location following a simple inspection.
When a new owner takes over a business, however, they must apply for a transfer of ownership on the existing license, just like a new business. This protects them from the limitations on the number of licenses that can be issued, but requires them to meet all other areas of qualification before the license is transferred. Check with local governing bodies for exact rules regarding how to file for and complete a liquor license transfer.
How hard is it to get a liquor license?
For a business to get a liquor license it must meet certain qualifications. If these qualifications are met, all paperwork is filled out completely, and there are no issues found during the required inspections, a business should be able to obtain a liquor license and begin service in 60 to 90 days.
First and foremost, the business owner who applies for the license must be over the age of 21. Those below the legal drinking age cannot sell, serve, or otherwise handle liquor in most states, and so cannot obtain a license to sell liquor either.
The applicant must also have a clean legal record. If the applicant has drug- or alcohol-related crimes, violent crimes, or other serious criminal infractions on their record, it is likely that their liquor license will be denied.
The business will need to be inspected, and certain elements must meet state and local codes before it can be qualified as a liquor-serving establishment. The owner will also need to provide proof of insurance, including alcohol-related liability.
Finally, realize that a finite number of liquor licenses are issued. This means that most cities will only allow so many restaurants to sell liquor within a certain area, and if there are no licenses available, you may be stuck on a waiting list until another license is revoked or expires.
Other qualifications vary significantly from state to state. It is not uncommon for applicants to be required to complete some kind of liquor sales training before receiving their license. Some states may also require you to have been a resident, or live within a set distance from the restaurant, for a minimum of 90 days before applying for a liquor license.