How to Run a Bar: Liquor Licenses Classes - dummies

How to Run a Bar: Liquor Licenses Classes

By Ray Foley, Heather Dismore

Your local governing agency offers liquor licenses for your bar in different classes. What kind of establishment you have determines what kind of license you need and how much you pay for it. The class of license you need depends completely on what you serve, where you serve it, how you serve it, and whom you serve it to.

Here’s a list of the broad, common classes of licenses used in many areas. They may be called something different in your area.

  • Tavern: Some states require taverns to offer a food menu, but others don’t. If you serve food but half of your sales are alcohol, your state government may require you to apply for a tavern license. In some states, no such separate license exists.

  • Outdoor or patio: Some areas require a separate license for an outdoor seating area that’s part of an existing bar. Make sure you let the licensing agents know if you plan to have outdoor seating, even if they don’t ask you.

  • Beer and wine: This license allows you to serve only beer and wine. Licensees cannot sell liquor or distilled spirits. In some areas, smaller restaurants (40 to 100 seats) can get only this type of license.

  • Restaurant: This license usually requires that only a certain percentage of your sales come from alcohol. States have varying percentages, but most requirements fall somewhere around 40 percent. Some states have a minimum number of seats required for your establishment to qualify for this license. A restaurant license usually allows you to serve beer, wine, and liquor. Some people call it an all-liquor license for that reason.

    Other people call this type of license a COP (consumption on premise) license, meaning that alcohol is purchased and consumed on the premises.

  • Club: Private clubs, such as country clubs, golf clubs, and so on, are eligible for a separate license allowing them to serve alcohol to their members. Some states allow only beer and wine in clubs, but others allow for all liquor.

    In certain counties, local governments mandate that alcohol may not be sold within those counties’ borders. These counties are known as dry counties. Most dry counties include an exemption for private clubs, so some creative owners get club licenses and then create a not-terribly-exclusive policy, selling membership cards to their patrons ($1 for a lifetime membership, for example), so they can then sell them cocktails.

  • Brewpub: Many places brew their own beer, and in some states, you need a separate license to serve it to the public. Check your local agency for details.

    Some states issue an alternating premises, or AP, liquor license for places like wineries and breweries that allows these establishments to brew and ferment alcohol at certain times and serve patrons at other times.

  • Eating place: This license is usually reserved for carryout places, such as delis, that may serve food but offer a small amount of carryout beer. Usually, you can only sell beer with this license, and you are restricted in the amount you can sell to each customer (one six-pack per customer, for example).

  • Late hour: In most areas, laws dictate what time bars close. You may be able to extend your hours beyond those standard hours by securing this additional license. So if the standard closing time is 2 a.m., a late hour license might allow you to stay open until 4 a.m.

  • Retail or package: A retail license applies to grocery stores, drugstores, liquor stores, or any other retail establishments that sell liquor, beer, or wine in its original, sealed packaging. Typically, consumption of these beverages is not allowed on premise. Don’t apply for this kind of license if you intend to open a bar.

Some states offer a few other classes that aren’t covered in detail here, such as hotel and restaurant, bed and breakfast, arts (for places like theaters that sell alcohol during intermission), and wholesale (for companies that sell liquor to bars and restaurants).