TABC Enlarges Pool of Businesses That can use Projected Sales to Qualify as Restaurants under GA-28
Updated: Oct 12, 2020
On August 10th, the TABC released an Industry Notice that changes how the TABC is handling the 51% calculation, again. The most previous change was on July 30, 2020. The most recent change should allow more businesses to open as restaurants under Governor Abbott's Executive Order GA-28.
If the TABC has alleged that a business does not qualify as a restaurant as it's defined in GA-28 and there are permanent food service facilities on the licensed premise, there are 3 main options for businesses to demonstrate that they qualify as a restaurant under GA-28 so they can begin operating for dine-in services:
1. Submit an affidavit evidencing on-premise alcohol sales since 4-1 have been less than 51% of the gross revenue generated at the premises This method hasn't changed since the previous 7-30 industry notice. The permittee needs to submit monthly breakdowns of the on-premise alcohol sales, food sales and other sales generated at the premises from April 1, 2020 to present using this affidavit. 2. If the on-premise alcohol sales since 4-1 are over 51%, FB holders (existing and new) can submit an affidavit stating that they will change their business model and project future alcohol sales over the next 12 months will be under 51% This is the biggest change from the 7-30 industry notice. Before, permittees who obtained a new food and beverage certificate (FB) could use future projected sales to qualify as a restaurant, even if their alcohol sales since 4-1 were over 51%; but existing FB holders could not use future sales and were limited to being under 51% during the 4-1 to present time period. As of August 10th (when the 8-7 industry notice appeared on the TABC's website), both existing and new FB holders can submit this affidavit stating that they're changing their business model and that the business's projected on-premise alcohol sales over the next 12 months will be under 51% of the gross revenue generated at the premises.
Businesses should expect to be audited by TABC around 90-days after submitting the affidavit to determine whether on-premise alcohols have been under 51% during that period. Since this policy was changed on 8-7 (or arguably 8-10), in my opinion, permittees who obtained FBs between 4-1-20 and 8-7-20 can operate for dine-in services without submitting the new affidavit as long as they maintain under 51% on-premise alcohol revenues (still expect a 90-day audit after the FB was issued).
3. If a permittee recently added permanent food service facilities and also recently obtained an FB, the permittee can operate for dine-in services without submitting the additional affidavit in #2 This is another change from the 7-30 industry notice. Before, any permittee who obtained an FB during the Covid Pandemic could begin operating for dine-in services as long as they maintained under 51%; now, only new FB holders that have also added permanent food service facilities can begin operating for dine-in services without also submitting the FB affidavit in method #2 (not to be confused with the affidavit to get the FB in the first place). I would expect an audit from the TABC 90-days after the FB is issued to determine whether on-premise alcohols have been under 51%.