Statewide NewsNew TABC Guidance Allows Businesses to Adjust Their 51 Percent Alcohol Sales Classification

After months of struggling to get by, Texas alcohol manufacturers and retailers received a win in the Texas Alcoholic Beverage Commission's updated 51-percent policy.
August 5, 2020
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Texas’ food and beverage service industry has faced rocky waters in this pandemic-laden world. Less than a month into the first business closures, a study found that 20 percent of Texas bars and restaurants closed for good.

The subsequent closures by the governor have led to confusion, specifically regarding the 51-percent red line drawn to distinguish establishments that may open from those that may not.

Any business that makes 51 percent or more of their revenues from alcohol sales, according to the order, cannot operate for in-house service. They may utilize to-go sales, however.

But this classification, for many businesses, illustrated an outdated picture of their model. Many establishments adjusted services, offering more food than previously so they could fit under the 51-percent threshold.

However, the Texas Alcoholic Beverage Commission’s (TABC) guidance did not provide flexibility for such businesses — and thus were taking enforcement action, whether warnings or citations, against retailers (restaurants and bars) and manufacturers (breweries, distilleries, and wineries).

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But new guidance by the TABC has remedied much of that issue, allowing businesses to apply for an update to their classification based on mid-pandemic operations and revenues.

“If your business has recently been operating at less than 51 [percent] alcohol sales, you may complete and submit TABC’s Affidavit Reporting Alcohol Sales to qualify as a restaurant under GA-28,” it reads.

It further stipulates that the new calculations will be based on receipts from April 1 through the date of submission and will include all on-premise sales of alcohol, food sales, and all non-alcohol or food sales for things like merchandise.

Up until last month, some manufacturers had contracted their permit-covered property (i.e. space on which they’re allowed to serve alcohol). This allowed for on-premises consumption sales that did not contribute to the 51-percent limit. 

For example, some set up tables in the parking lot, allowing customers to purchase alcohol and consume it “off-premises.” The TABC, however, clamped down on that practice in July.

But this new guidance nixes off-premise retail sales from the calculation. 

January Wiese, executive director of the Texas Hill Country Wineries, told The Texan of the new guidance, “It will definitely be beneficial for wineries and other manufacturers.”

Texas Hill Country Wineries is a trade association founded in 1999 and has expanded to encompass 53 wineries, over 30 growers, and over a dozen additional associate member businesses.

Wiese added that, to her knowledge, only one of her members has filed the affidavit thus far and hasn’t yet heard back from TABC on their ruling. But she expects most wineries will try to take advantage of this new policy, looking to grow their opportunities during a struggle-filled time.

“Hopefully, it happens quickly,” she underscored, noting that these businesses need more opportunity to bring in revenue.

Many of the Hill Country wineries adjusted their operations not only after the pandemic hit, but after each policy change levied by the state and local governments. Some have fired up their kitchens to serve more food. Others have paired food with wine in customer packages that can be consumed on the premises.

This time of year, many are also taking advantage of agriculture manufacturing tours, especially as the harvesting season ramps up.

But there still lies a long road ahead for the hospitality and leisure industry and this new guidance provides some slack business owners are desperate to use.

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Brad Johnson

Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad watching and quoting Monty Python productions.

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