Serving alcohol on your premises makes smart business sense. According to Joseph Levey, a lawyer who specializes in liquor licenses, alcohol has a 20-40% profit margin compared to food, which tracks at less than 10%. Serving alcohol, developing a drink program, or even building a bar area can all make your establishment more attractive to patrons and a lot more profitable as a result. However, unlike most other new menu items, alcohol creates unique challenges, and if you’re not prepared it can negatively affect your business. Start serving the right way by following these tips:
Get Your Liquor License
Selling liquor without a license is illegal in Texas and exposes you to hefty fines, and potentially even jail time. Getting a liquor license from the Texas Alcoholic Beverage Commission (TABC) is your first and biggest priority. Earning a license typically takes 45-60 days, but it can take longer in some places, so you shouldn’t delay getting started. The TABC offers 20 different types of licenses based on where and when you want to serve alcohol, and whether you intended to sell liquor or just beer and wine. Each license type has different requirements, but most will require you to obtain a Texas Alcoholic Beverage Commission Bond (TABC Bond), also known as a conduct bond. The cost of this bond depends on how close your establishment is to a public school, but it typically falls in the range of $5,000. You can’t get your license until you have a bond, so find a company to work with as soon as possible.
Prepare Your Facility
What effect will serving alcohol have on your current facility? For example, do you have enough storage space to keep cases of beer and bottles of wine? Can your current refrigeration capabilities keep everything cold? Will you need to order more glassware? These are all questions you need to ask upfront. Serving alcohol doesn’t mean you have to totally reinvent your business, but it will create logistical challenges on an ongoing basis. Since you don’t need a Texas Alcoholic Beverage Commission Bond (TABC Bond) or a liquor license to start preparing, figure out what changes or additions you need to make immediately. You may need as long as it takes to earn your license to get your business fully prepared to capitalize on this opportunity.
Train Your Staff
Everyone knows that alcohol creates more problems than it solves. If you’re going to start serving it on your premises you need to be prepared for the hazards of intoxicated people. This can include anything from arguments to damaged property, or even criminal behavior. Your staff is your best resource because they are the one interacting directly with the clientele. Consult with the TABC to learn about your legal obligations in regards to overserving, then create policies dictating how you will serve alcohol responsibly. Train your staff in these policies and enforce them strictly, because if you don’t the consequences could be significant. A claim could be filed against your Texas Alcoholic Beverage Commission Bond (TABC Bond), and you could even have your license suspended or revoked if you serve to minors.
Run the Numbers
Just because alcohol has a high-profit margin doesn’t mean you’re guaranteed to make money off of sales. You need to carefully calculate all the costs involved and price your drinks accordingly. Keep in mind that the alcohol itself is not the only cost. You are also paying for equipment like taps and drink dispensers, accessories like mixers and limes, and staff to serve/mix drinks, among many other things. There are also one-time costs like the money you invest to build a bar area, and occasional costs like the fee to renew your Texas Alcoholic Beverage Commission Bond (TABC Bond). Calculate how much you need to charge to turn a profit and how many drinks you need to sell on a daily or monthly basis to sustain yourself. These insights can also help you decide what kinds of drinks or specials to offer to bring people into your business.
Sweat the Details
An alcohol program can lose profitability and even start costing you money if it’s not managed and monitored carefully. Stay on top of how much you’re ordering, serving, and selling, and keep meticulous records. Do everything necessary to preserve your liquor license, including keeping your Texas Alcoholic Beverage Commission Bond (TABC Bond) in good standing. Finally, hold your staff and your customers accountable if there is ever an alcohol-related issue. It pays to be strict in this regard considering how high the consequences are for you, your business, and everyone on-site if something goes wrong.
Viking Bond Service is a leading provider of surety bonds, including the Texas Alcoholic Beverage Commission Bond (TABC Bond) you need to legally sell alcohol in Texas. It’s free and easy to apply for a bond, and our team will do everything possible to find you the lowest rate available. As you’re getting ready to start alcohol sales, learn more about why bonds are so important and how they protect you and your customers. Consult a free resource we created: All About Surety Bonds.